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CRS – The Federal Reserve’s Main Street Lending Program

The Federal Reserve’s Main Street Lending Program, August 27, 2020. IF11632, Marc Labonte, Lida R. Weinstock. “In response to Coronavirus Disease 2019 (COVID-19), the Federal Reserve (Fed) created a series of emergency lending programs, including the Main Street Lending Program (MSLP). The MSLP supports lending to eligible businesses and nonprofits and marks the first time the Fed has lent to nonfinancial businesses since the 1930s (though it purchased commercial paper [short-term debt securities] issued by non financial businesses in 2008 and 2009). Due to the effects of COVID-19, the U.S. economy has experienced a sudden and deep recession. The unemployment rate has reached its highest level since the Great Depression,and the decline in output in the second quarter of 2020 was record-breaking. Normal commerce was severely disrupted starting in March and has only partially recovered in the following months. Social distancing and fears of the virus hit many “main street businesses”in retail and hospitality industries particularly hard. Many disrupted businesses, even if solvent prior to COVID-19, began to experience cash flow problems and faced difficult decisions about how to stay in business…”

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