The Fed unveils up to $2.3 trillion in additional virus relief for small businesses and local governments
- The Federal Reserve unleashed its latest policy arsenal on Thursday, offering up to $2.3 trillion in economic aid to businesses and state and local governments.
- The central bank extended $600 billion in loans through its Main Street Lending Program to small and mid-sized businesses pummeled by the coronavirus outbreak.
- Up to $500 billion will be offered to state and local governments to avoid budget shortfalls and maintain spending on critical relief programs, the Fed said in a statement.
- The bank's corporate credit facilities and Term Asset-Backed Securities Loan Facility now collectively offer up to $850 billion to households, employers, and companies.
- Visit Business Insider's homepage for more stories.
The Federal Reserve announced on Thursday plans to unleash up to $2.3 trillion in additional economic aid amid the coronavirus lockdown.
The central bank will offer up to $600 billion in loans through its Main Street Lending Program to small- and mid-sized businesses hit by the sudden economic halt. Firms tapping the credit pool "must commit to make reasonable efforts to maintain payroll and retain workers," the Fed said in a statement.
A Municipal Liquidity Facility will offer as much as $500 billion to state and local governments to avoid budget deficits and encourage spending on critical relief efforts.
The lending will arrive in the form of Fed purchases of short-term notes from states, counties, and cities.
The Fed bolstered the size and scope of its Primary and Secondary Market Corporate Credit Facilities and its Term Asset-Backed Securities Loan Facility to add additional capital to households, employers, and businesses.
The three programs now account for $850 billion in credit, and firms tapping the lending pool will face restrictions on stock buybacks and dividend payments for one year after the debt is repaid.
"Our country's highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus," Fed chair Jerome Powell said in a statement. "The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible."
The Fed expanded on plans announced Monday to begin buying debt backed by the Small Business Administration's Paycheck Protection Program. A new liquidity facility will allow the central bank to extend credit to lenders offering PPP loans, creating a new market for the debt and shore up more capital for emergency lending.
Firms that utilized PPP loans are still eligible for aid from the Main Street facility.
The central bank's latest policy salvo arrives as the outbreak's economic toll intensifies. Jobless claims released Thursday morning showed 6.6 million Americans filing for unemployment in the week ended April 4, extending a record streak and further demonstrating the virus' sudden blow to the labor market.
The Fed said it will continue to monitor the primary and secondary markets for municipal securities and may provide additional relief to support credit flows.
Now read more markets coverage from Markets Insider and Business Insider:
Do you have a personal experience with the coronavirus you'd like to share? Or a tip on how your town or community is handling the pandemic? Please email email@example.com and tell us your story.
And get the latest coronavirus analysis and research from Business Insider Intelligence on how COVID-19 is impacting businesses.
- The best fast chargers you can get for smartphones
- Best smartphones with UFS 3.1 storage
- Best collar mics for video recordings and podcasts
- Best smartphones with 120Hz refresh rate
- Best HDMI switchers you can get for your TV