Federal Reserve unveils over $2 trillion in new lending for small businesses, city governments and big firms

Fed Chair Jerome Powell said the nation's top priority is fighting the pandemic and caring for the ill, but the central bank is doing whatever it takes to provide economic relief.

"The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible," Powell said.

The latest actions by the central bank go even further than what the Fed did during the Great Recession in 2008-09. The Fed is now directly buying debt from large corporations and states, moves it has never done before now. There's been widespread worry that some companies and households would go bankrupt during the pandemic because they would not be able to borrow money in time, but the Fed has taken large and unprecedented steps to keep as much credit flowing as possible.

The Fed will soon begin purchasing up to $750 billion in corporate loans from big businesses that had at least an investment grade rating on March 22, a high bar that some struggling big retail chains such as Macy's, Gap or J.C. Penney likely won't be able to meet.

To help midsized companies, the Fed will purchase up to $600 billion in loans from banks that would go to businesses with up to 10,000 employees. These loans can be anywhere from $1 million to $150 million, so larger than what the Small Business Administration is offering. Companies getting this money must be registered in the United States and primarily operating domestically. The loans are for four years to give businesses time to get back on their feet.

Many states and cities are already warning they are about to run out of cash as tax revenue have all but dried up and costs have skyrocketed to deal with the health crisis. The Fed plans to start purchasing up to $500 billion in short-term bonds from all 50 states, the District of Columbia and large cities with more than a million people.

To aid small businesses, the Fed has agreed to backstop the Small Business Administration's Paycheck Protection Program loans, which have had a rocky rollout since they began on Friday. Businesses with under 500 employees are supposed to go to banks to get loans of up to $1 million, by many small business owners complain the bank isn't taking applications or is demanding too much paperwork.

President Donald Trump has said the small business lending program has had a "few glitches," but banks and business owners around the country report mass confusion and delays in accessing the funding. The initial program was supposed to do $350 billion in loans. Trump is asking Congress for an additional $250 million.

The Fed is also buying a wide range of other debts to ensure Americans can still get access to home mortgages, auto loans and other borrowing needs.

"The Federal Reserve remains committed to using its full range of tools to support the flow of credit to households and businesses to counter the economic impact of the coronavirus pandemic and promote a swift recovery once the disruptions abate," the central bank said in a statement Thursday.