On Tuesday, July 28th, the Federal Reserve extended seven emergency loan programs. The emergency loan extension will allow the programs to run until the end of the year. These seven programs were previously set to expire on the 30th of September. Now the Fed’s board of governors has reassessed the previous deadline. Given the course of the current COVID-19 pandemic, the Fed sees a necessity in keeping credit flowing.
“The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic,” the Fed explained in a press release.
The Emergency Loan Extension Is Primarily Precautionary
A large part of the Fed’s reasoning is precautionary. While these loan programs have been available for months, few people have taken them. For example, the Fed’s loans to primary dealers peaked at $33 billion on April 15th. But on July 15th, the same sum was down to just $1.7 billion.
The Fed believes that the drop in lending activity from the emergency loan programs is due to credit being available elsewhere. But they also assert that having the emergency loan extension in place is important. If financial conditions in the US deteriorate again, the emergency loan programs may play an important part in re-stabilizing the economy.
So far, these programs have seen little use. Some critics argue that the programs are overly complex. But for now, many businesses are finding the funding they need elsewhere.
For current interest rates, please visit our SBA loan rates page.
Program Changes In The Emergency Loan Extension
The emergency loan extension announced on Tuesday will affect:
- The Primary Dealer Credit Facility
- The Money Market Mutual Fund Liquidity Facility
- The Primary Market Corporate Credit Facility
- The Secondary Market Corporate Credit Facility
- The Term Asset-Backed Securities Loan Facility
- The Paycheck Protection Program Liquidity Facility
- The Main Street Lending Program
Other Fed loan programs already set to expire on December 31st or later are still unaffected.
The Emergency Loan Extention
All the programs mentioned above have been extended from September 30th to December 31st. Congress has thus far approved $450 billion for the programs.
You can find the full details of the extension under the now-revised Section 13(3) of the Federal Reserve Act.
The Federal Reserve extended seven of its emergency loan programs. The changes were announced on Tuesday, July 28th. The seven loan programs will now run until the end of the year. These seven programs were previously set to expire on the 30th of September. Now, the Fed’s board of governors has reassessed the previous deadline. Given the course of the current COVID-19 pandemic, the Fed believes that ensuring credit flow is necessary.
“The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic,” the Fed explained in a press release.
The Emergency Extensions Are Primarily Precautionary
A large part of the Fed’s reasoning is precautionary. While these loan programs have been available for months, few people have taken them. For example, the Fed’s loans to primary dealers peaked at $33 billion on April 15th. But on July 15th, the same sum was down to just $1.7 billion.
The Fed believes that the drop in lending activity from the emergency loan programs is due to credit being available elsewhere. But they also assert that having the emergency loan extension in place is important. Financial conditions in the US may very well deteriorate again. In that case, the emergency loan programs may play an important part in re-stabilizing the economy.
So far, these programs have seen little use. Some critics argue that the programs are overly complex. But for now, many businesses are finding the funding they need elsewhere.
What Programs Are Part Of The Emergency Loan Extension?
The emergency loan extension announced on Tuesday will affect:
- The Primary Dealer Credit Facility
- The Money Market Mutual Fund Liquidity Facility
- The Primary Market Corporate Credit Facility
- The Secondary Market Corporate Credit Facility
- The Term Asset-Backed Securities Loan Facility
- The Paycheck Protection Program Liquidity Facility
- The Main Street Lending Program
Other Fed loan programs already set to expire on December 31st or later remain unaffected.
The Scope Of The Extensions
All of the programs mentioned above are available until December 31st. Congress has thus far approved $450 billion for the programs. White House officials are considering how the programs can be levered up to $4 trillion. So far, that hasn’t happened
You can find the full details of the extension under the now-revised Section 13(3) of the Federal Reserve Act.
