Along with the PPP (Payroll Protection Program) another fed run program rolled out this week called Main Street to provide low-cost loans to firms with fewer than 15,000 workers. The Main Street launch has received a luke warm welcome from community banks due to the paperwork required per an American Bankruptcy Institute article today, but basically the lender has a 95% backstop from the federal government in event of default.
I wonder why the lukewarm interest from community banks? My guess is that they much prefer PPP for their clients, which is a 100% forgiveable loan, and has been extended recently to allow for forgiveness for 24 weeks of payroll rather than just eight, for those businesses who were under shut down orders for the first couple months and couldn’t bring back their workers. Since PPP funds are still available and the application deadline is not until the end of June, of course that sounds like a much better alternative. Plus, we have found that community banks did a far better job than larger banks in getting approvals from the SBA.
But for those who need funds that will be spent for things not covered under PPP, this may be an excellent alternative.
Information and links on how to apply are found here.