The Federal Reserve today clarified its expectations for lenders when underwriting Main Street Lending Program loans. In revisions to a set of frequently asked questions on the MSLP, the Fed emphasized that lender should take into account both the borrower’s pre-pandemic condition and their post-pandemic prospects.
The FAQs also clarified that “supervisors will not criticize eligible lenders for originating Main Street loans in accordance with the program’s requirements, including cases where such loans are considered non-pass at the time of origination, provided these weaknesses stem from the pandemic and are expected to be temporary or if such loans are part of a bank’s prudent risk mitigation strategy for an existing borrower.”
