Local lenders report slow start to Main Street Lending Program

LOCAL LENDERS participating in the Main Street Lending Program reported a slow start since applications opened last month. / AP FILE PHOTO/PATRICK SEMANSKY

PROVIDENCE – If the outpouring of applications for the Paycheck Protection Program amounted to a flood initial interest in the new Main Street Lending Program might be more of a trickle.

At least one local lender that has signed up to participate in the $600 billion Federal Reserve program reported little-to-no interest from Rhode Island businesses since they began accepting applications last month.

In a call with Providence Business News after releasing its second quarter earnings report, Washington Trust Co. Chairman and CEO Edward O. Handy III said the bank had not received a single application or inquiry. Since then, the Westerly-based lender has received a few nibbles, but none that turned into actual applications, according to James M. Hagerty, executive vice president and chief lending officer.

Handy speculated that the program’s parameters may make it less appealing for businesses. Unlike the PPP loans, which offer 100% forgiveness providing recipients meet certain criteria, the low-interest loans offered through the Main Street Lending Program must be repaid, although they do not specifically have to go to payroll expenses. It’s also geared toward larger-size companies.

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Other local lenders including Citizens Bank and BankFive also reported slow starts to the program, although each bank had received some inquiries and, in the case of Citizens, actual applications as well. Citizens and Bank of America both declined to share specific numbers of inquiries and applications.

This is not necessarily unexpected; unlike the PPP application, this is a “complex” program with substantial work required on the front end, according to Treacy Reynolds, a spokeswoman for the Federal Reserve Bank of Boston. Reynolds also noted that the number of financial institutions registered to participate in the program continues to grow – reaching over 400 as of July 24 that together represent over half of the national banking system’s total assets. Seven lenders have signed up to take new applicants in Rhode Island, an increase over the five in the system on July 8, according to the Federal Reserve’s website.

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

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