Final Main Street Lending numbers show little R.I. participation from banks, businesses

RECENT DATA from the Federal Reserve shows just two Rhode Island businesses were among the 1,800 recipients of loans through the Main Street Lending Program, while four loans came from local lenders. / AP FILE PHOTO/PATRICK SEMANSKY

PROVIDENCE – There were only two Rhode Island companies among the 1,800 businesses to receive loans through the Federal Reserve’s Main Street Lending Program, and neither came from a local lender.

The Jan. 11 update from the Federal Reserve details the names, loan amounts and lenders for the $16.5 billion in low-interest, deferred-payment loans made from the program launch in August through the end of the year. Two Rhode Island companies – Colette Travel Service Inc. and Green Development LLC – received loans. Collette received $25 million and Green Development received $28.8 million. Combined, the grants represent 3% of the total dollars allocated nationwide.

Two Rhode Island-based lenders – Citizens Bank and Centreville Bank – also provided a combined $71.4 million via four loans through the program, though the recipients of those loans were not Rhode Island companies.

The $600 billion program drew criticism, including from local financial experts, who pointed to lack of early participation as evidence that the stipulations on the program made it ill-suited for both borrowers and lenders. Participation surged significantly in December after the U.S. Treasury Department announced the Coronavirus Aid, Relief, and Economic Security Act-authorized program would not be extended past the end of 2020. According to data from the Federal Reserve, 1,150 loans were made in December compared with the 650 that were settled from July to November. Nearly 45% of lenders also participated for the first time in December.

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Eric S. Rosengren, CEO and president of the Federal Reserve Bank of Boston, noted the challenges of the program in recent remarks to the Greater Boston Chamber of Commerce, admitting the program “unfortunately did not meet the needs of everyone who expressed interest.”

While Rosengren said the program filled a hole for midsized businesses, he suggested changes that would have made it “more impactful.” Specifically, he suggested upping the credit available by focusing less on potential Treasury loss; reducing legal and operational complexity; offering longer terms and greater refinancing abilities; and structuring banks’ roles differently to make it more attractive to lenders.

Rosengren said he would have preferred the program be extended through the first half of 2021 and hoped any future emergency lending programs would incorporate lessons learned from the Main Street program.

He added that the program “showed the feasibility of marshalling lenders and the public sector to assist hard-to-reach businesses – businesses that can survive with the support of a bridge to better times, post-downturn.”

Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.

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