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Federal Reserve Chairman Jerome Powell at a news conference in 2019. Photo: Eric Baradat/AFP via Getty Images

The Federal Reserve said on Friday it would again lower the minimum loan size for its pandemic-era small business program.

Details: Businesses and nonprofits will be able to borrow a minimum of $100,000 from the facility, down from $250,000 — a move that might attract smaller businesses that don't need as hefty of a loan. Since the program launched earlier this year, the minimum loan size has been reduced twice.

  • The Fed also said banks can collect higher fees on these loans, which would encourage banks to lend.

Why it matters: The Main Street Lending Program has received heavy criticism, including from members of Congress who said it doesn't go far enough to help mom-and-pop businesses.

  • Demand has been weak. The program has only doled out 400 loans worth $3.7 billion — a sliver of the $600 billion the facility has the capacity to lend.

The big picture: The change comes as small businesses that have been ravaged by the pandemic might need another lifeline, as higher case counts threaten renewed economic lockdowns.

  • The Fed says the move will "better target support to smaller businesses that employ millions of workers and are facing continued revenue shortfalls due to the pandemic," according to the release.

Yes, but: Fed chairman Jerome Powell has noted that piling on debt might not help small businesses.

  • Rather, forgivable loans — like those offered through the Paycheck Protection Program — would be more helpful, but the Fed can't issue those, Powell says.
  • It's unclear when (or if) another round of PPP is coming. Congress is still deadlocked over another stimulus package.
  • Powell told Congress last month that there was "very little demand" in the facility for small business loans below $1 million.

What's next: The Fed releases a policy decision next week, followed by a news conference on Thursday.

Go deeper

Jan 28, 2021 - Podcasts

Biden's wide-ranging climate plan

Yesterday, President Joe Biden signaled a new direction for the country when it comes to climate change. He said it should be considered an essential part of foreign policy and national security.

He signed an extremely wide ranging executive order that includes a number of new measures that could kick off the battle between the White House and the oil industry.

  • Plus, Facebook’s pullback from politics.
  • And, the second round of small business loans are off to a slow start.

Tracking the pandemic's unequal impact

Expand chart
Data: Morning Consult/Axios; Chart: Will Chase/Axios

The pandemic was bound to hit the most economically vulnerable among us the hardest. New polling data from Morning Consult, out this morning, shows the degree to which those difficulties were more concentrated among people of color.

Catch up quick: The Morning Consult/Axios Inequality Index has tracked the economic experience of adults in three wage groups since May 2020. We began publishing the findings in May of this year, and six months in, we’re slicing the data a little differently — and looking at inequality between ethnicities.

57 mins ago - Health

WHO says Omicron poses "very high" risk

World Health Organization Director-General Tedros Adhanom Ghebreyesus speaking in Geneva in October. Photo: Fabrice Coffrini/AFP via Getty Images

The World Health Organization said Monday in a new risk assessment that it believes the COVID-19 Omicron variant poses a "very high" risk to the globe because it may be more transmissible than other strains of the virus.

Why it matters: Though the WHO acknowledged there are still many uncertainties associated with the variant, the agency said it believes the likelihood of potential further spread of Omicron around the world is "high."