US Fed expands lending program to smaller cities

The US Federal Reserve on Monday widened a new crisis lending programs to grant many more cities and counties access to funds aimed at blunting the coronavirus pandemic's economic damage.

The Fed lowered the population thresholds announced early this month in the Municipal Lending Facility (MLF) to extend the financing to US counties with a population of 500,000 or more, and US cities with a population of at least 250,000 residents.

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The previous minimum was two million residents for counties and one million for cities, which limited participation to just 76 entities, including all 50 US states and Washington, DC.

"The new population thresholds allow substantially more entities to borrow directly from the MLF than the initial plan announced on April 9," the Fed said in a statement.

The central bank rapidly rolled out a series of new lending vehicles to pump cash into the US economy even before it started to see the damage imposed by the widespread business closures and job losses.

Under the MLF, the Fed "will offer up to $500 billion in lending to states and municipalities to help manage cash flow stresses caused by the coronavirus pandemic."

The Fed is also buying unlimited amounts of US Treasury debt and corporate bonds, as well as backstopping the Paycheck Protection Program, which offers bank loans to small businesses.

It is also lending to larger businesses through its Main Street Lending facility.