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The Federal Reserve unveils additional virus relief for small businesses and local governments

04/14/2020

On Thursday, April 9th, the Federal Reserve authorized $2.3 trillion in emergency loan stimulus to help further combat the economic impact of the coronavirus pandemic. The aid package includes $500 billion for state and local governments to deliver critical services during the pandemic. Available funds will arrive in the form of the Fed’s purchase of short-term notes from states, counties, and cities.

States, cities, and counties are eligible for the loan program, subject to review and approval by the Federal Reserve. Important highlights of the stimulus package include:

  • Eligible Notes: Eligible Notes are tax anticipation notes, tax and revenue anticipation notes, bond anticipation notes, and other similar short-term notes.
  • Limit per State, City, and County: The special purpose vehicle (“SPV”) may purchase Eligible Notes issued by or on behalf of a State, City, or County in one or more issuances of up to an aggregate amount of 20% of the general revenue from own sources and utility revenue of the applicable State, City, or County government for fiscal year 2017.
  • Origination Fee: Each Eligible Issuer that participates in the Facility must pay an origination fee equal to 10 basis points of the principal amount of the Eligible Issuer’s notes purchased by the SPV. 

As additional guidance is issued, your Fedeli team will continue to keep you updated of developments and the impact for you, your business, and your employees.

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