Default Wave Looming On Fed And Treasury-Supported Pandemic Loans

The Main Street Lending Program (MSLP), launched in 2020 by the Federal Reserve and U.S. Treasury under Section 13(3) of the Federal Reserve Act, provided over $17.5 billion in liquidity to 1,830 small and mid-sized U.S. businesses. The Program was intended to serve as a critical bridge during the Covid-19 pandemic. Five years later, roughly half of these loans made under the Program are outstanding and approaching maturity. Beginning in July 2025 and continuing through year-end, the MSLP borrowers will be required to make 70% balloon loan repayments to satisfy their obligations in full. Many Program participants will be unable to refinance their loans. This article discusses the structure of the MSLP loans, the growing wave of expected defaults, available borrower remedies and emerging opportunities for distressed debt investors.

Read the full article in Financial Advisor Magazine.