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DJ Fed's Lending To Small Business Hit Roadblocks -- Market Talk

· 02/05/2021 10:53

10:52 ET - The Fed's Main Street Lending program, aimed at bringing credit to smaller firms during the pandemic, didn't go further because demand for business loans was weak, a study from Liberty Street Economics shows. Uncertainty about how loss-sharing with the Fed and Treasury would play out also hindered the program, as did restrictions on salaries or dividends. The program terminated on January 8, 2021. "The lack of risk-based pricing may have deterred some safer borrowers," the study says. "The overall risk tolerance of Main Street also mattered. A more aggressive facility would have reached more borrowers but with higher expected losses to taxpayers. These are considerations for any future Main Streets." (paulo.trevisani@wsj.com; @ptrevisani)

(END) Dow Jones Newswires

February 05, 2021 10:53 ET (15:53 GMT)

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