Powell: Many small companies can borrow without Main Street

Federal Reserve Chair Jerome Powell says that many mid-size U.S. businesses are w able to borrow from banks, suggesting that need for a Fed lending program that was designed to serve struggling medium-size companies has waned.

In remarks prepared for delivery Tuesday to House Financial Services Committee, Powell said re are 230 loans, accounting for a total of about $2 billion, that have been provided or are in pipeline under Fed's Main Street Lending Program. Powell's testimony was released Monday by Fed.

Still, that sum is far short of $600 billion that Fed h initially set aside for Main Street program. Treasury Department and Fed allocated $75 billion from congressionally approved taxpayer funds to support Main Street program; any losses up to that amount would be covered by Treasury.

“Main Street loans may t be right solution for some businesses, in part because...se loans cant be forgiven,” Powell said. “ evidence suggests that most creditworthy small and medium-sized businesses can currently get loans from private-sector financial institutions.”

Fed chair has said that Main Street was intended to help companies that were too large for Paycheck Protection Program, which provided forgivable loans to small companies, and too small for Fed's corporate bond purchases, which are intended for businesses large eugh to issue ir own bonds.

central bank has faced criticism for t making Main Street program easier to use for banks, which evaluate and issue loans. Fed buys 95% of loan from banks, reducing ir credit risk.

On Tuesday, Powell will testify to House committee along with Treasury Secretary Steven Mnuchin in a hearing focused on implementation by Fed and Treasury of emergency programs that Congress established in its $2 trillion relief pack approved in March.