The central bank’s coronavirus relief program for midsize businesses, meant to offer low-interest credit to weather the virus-driven downturn, covered loans for only 13 companies by the end of July. Only one of them was in the energy sector. Larger and smaller oil and gas companies, meanwhile, have been able to tap other government aid efforts after stay-at-home orders drove the price of oil down as fewer people used cars and airplanes. “It really does seem to be midsized companies left out,” said Gregg Gelzinis, senior economic policy analyst at the Center for American Progress, a left-leaning think tank.
The program has been hounded for months by a slow rollout. And crucially, private banks need to participate to make the program work.
Under the program, the Fed would purchase 95 percent of a loan issued by private banks to midsize businesses — those with fewer than 15,000 employees or less than $5 billion in annual revenue. But through July, only five banks have issued loans through the program.
Before rolling out the Main Street lending facilities, established jointly with the Treasury Department, the Fed amended the terms of some of the loans to allow borrowers to use the money to pay off old debt — a move called for by oil-state Sen. Ted Cruz (R-Tex.) as well as by the IPAA.