New York(CNN Business) The Federal Reserve is changing the rules of its Main Street Lending Program to help smaller businesses that have been struggling to get by while waiting for additional stimulus from Congress.
The Fed on Friday announced it would issue loans as low as $100,000 and reduce the fees for the loans. Previously the minimum amount it would lend was $250,000.
Businesses have been pressing for greater access to the Fed program, saying they needed money that wasn't available from banks.
"Banks are not in the business of lending money to businesses that are failing," said CEO David Kong, CEO of Best Western, one of the business executives who wrote a letter calling for changes to the Main Street program. "Small and medium-sized businesses are struggling and they can't get help."
The Main Street Lending Program is designed to support small and medium-sized businesses and nonprofit organizations that were in sound financial condition before the Covid-19 pandemic but now lack access to credit on reasonable terms.
To date the program has made nearly 400 loans for a total of $3.7 billion, about $9 million per loan on average.
Unlike the Paycheck Protection Program approved by Congress, which has provisions for those loans to be forgiven if the money goes to keep employees on staff, loans from the Main Street Lending Program are required to be repaid. But it does give borrowers time to recover from the pandemic with deferred principal and interest payments.
Fed Chair Jerome Powell, who has been urging Congress to make more stimulus available to support the US economy, said at a press conference last month he was looking to change the terms of the program but that there were legal limitations as to what the Fed is allowed to do.
"If you look at the law ... it's very clear that we are to make loans only to solvent borrowers," he said at that time. "Having said that, we're, we're continuing to work to improve Main Street, to make it more broadly available — make it pretty much to any company that needs it and that can service a loan."
-- CNN Business' Matt Egan contributed to this report