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Bank of America Is Only Big Bank Actively Taking New Customers in Fed's COVID-19 Program

By Dave Kovaleski – Updated Jul 9, 2020 at 9:51AM

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But several regional banks are also taking new business customers in the Main Street Lending Program.

The Boston Federal Reserve released its initial list of banks that will be accepting applications from new business customers in the Federal Reserve's Main Street Lending Program, and only one megabank was among them -- Bank of America (BAC -1.48%).

Bank of America was also the only bank to be listed as a lender in all 50 states, plus Washington D.C.

Banks have the option of serving existing customers only (like Citigroup, U.S. Bancorp, and Wells Fargo, according to The Wall Street Journal) or declining to announce their plans (like JPMorgan Chase, also according to the Journal).

Beyond Bank of America, only one other top 10 bank, Truist, was on the list of banks taking new business customers. Truist will provide loans in 16 states, followed by KeyBank, which was listed as a lender in 15 states. Among other lenders, BBVA was in 12 states; Citizens was in 12 states; Zions Bancorporation was in 10 states; Fifth Third was in eight states; People's United was in seven states; and Synovus was in five states.

A sign in a store window that says "Closed Due to COVID-19."

Image source: Getty Images

The $600 billion Main Street Lending Program was established by the Federal Reserve to provide loans for small- and mid-sized businesses to get through the COVID-19 crisis. 

The program offers five-year loans with floating rates, and principal and interest payments deferred. The loans are in the range of $250,000 to $300 million. After making the loans, the banks then sell 95% interest in the loan to the Federal Reserve to collect on it, backed by the Treasury if the businesses don't repay. The lender retains 5% of the loan.

Federal Reserve Board Chairman Jerome Powell said this week that about 300 banks had signed up to participate. However, banks are "not getting a ton of interest from borrowers," Powell said in a congressional hearing this week.

The list of participating banks will be updated regularly as more lenders register and are added to the list.

Both Bank of America and Truist were down about 1% in trading on Wednesday.

Correction: The original version of this report should have clarified that Wednesday's announcement applied to banks that announced they were serving new business customers. Others may stick to existing customers or decline to announce their plans.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Bank of America Corporation Stock Quote
Bank of America Corporation
$30.57 (-1.48%) $0.46
Citigroup Inc. Stock Quote
Citigroup Inc.
$42.59 (-0.93%) $0.40
Banco Bilbao Vizcaya Argentaria, S.A. Stock Quote
Banco Bilbao Vizcaya Argentaria, S.A.
$4.41 (-2.43%) $0.11
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
$105.85 (-0.88%) $0.94
Wells Fargo & Company Stock Quote
Wells Fargo & Company
$40.03 (0.05%) $0.02
U.S. Bancorp Stock Quote
U.S. Bancorp
$40.96 (-0.24%) $0.10
Truist Financial Corporation Stock Quote
Truist Financial Corporation
$43.04 (-0.88%) $0.38
Fifth Third Bancorp Stock Quote
Fifth Third Bancorp
$31.57 (-1.62%) $0.52
Synovus Financial Corp. Stock Quote
Synovus Financial Corp.
$37.09 (-0.70%) $0.26
KeyCorp Stock Quote
$15.96 (-0.87%) $0.14
People's United Financial, Inc. Stock Quote
People's United Financial, Inc.
Zions Bancorporation Stock Quote
Zions Bancorporation
$52.76 (-1.44%) $0.77
Citizens Financial Group, Inc. Stock Quote
Citizens Financial Group, Inc.
$32.99 (-1.99%) $0.67

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