Tomorrow, the Congressional Oversight Commission (COC) is expected to release its monthly report on the CARES Act and its many taxpayer-funded relief programs. One of the most important, the Main Street Lending Program (MSLP), has come under fire from lawmakers and business owners alike for failing to offer support to the businesses in dire need of aid.
“The Fed’s Main Street Lending Program was intended to help businesses weather the tough business conditions brought on by the COVID-19 crisis, but in practice, it’s done anything but,” Kyle Herrig, president of Accountable.US. “Businesses need real support to stay afloat during this crisis — and by all accounts, the Main Street Lending Program isn’t offering it. We need much more information and much stronger oversight to ensure this program is helping businesses get the help they need.”
The Fed has failed to effectively use the program, and what little has been made public has raised serious red flags. Ahead of the COC’s August report, here are some of the failures of the program that are already evident:
- The Main Street Lending Program (MSLP) was intended to offer $600 billion in emergency loans to small- and medium-sized businesses during the pandemic, but as of early August 2020, the MSLP had only $530 million through just 54 loans active in its system.
- Only 13 MSLP loans have been disclosed, totaling $92,175,000 in aid to recipients in just five states — Wisconsin, Florida, Pennsylvania, Louisiana, and Texas — and from just five lenders.
- The MSLP has been criticized for not aiding the firms that needed help the most and called a “failure” for its lack of distributed aid. One business group said 81% of its members who applied were unable to obtain MSLP loans.
- The program’s design disincentivized banks from participating, with just one major bank disclosing its participation in the program and “far fewer” total banks expected to join than the number participating in the Paycheck Protection Program (PPP).
Read Accountable.US’ analysis of the program’s failure to aid businesses here.