Just eight loans had been made as of late July, six of them through a single community bank in Florida, according to new data on the federal rescue program for small and midsize companies hurt by the pandemic.
Federal Reserve Chairman Jerome Powell said about 300 lenders have signed on to the program and that the central bank is committed to making adjustments that could attract more borrowers.
Worried about a lack of demand and that some of their customers are ineligible, community banks are still on the fence about participating in the effort to back loans for businesses recovering from the pandemic crisis.
Payouts continue to be relatively generous, but that could change if the Federal Reserve demands banks bolster capital or the economy worsens.
The request for a second municipal lending facility was made in a bipartisan letter sent to the Fed last week by four senators.
The measure, passed 208-199, would give cash-strapped states and local governments more than $1 trillion while providing most Americans with a new round of $1,200 checks
The head of the U.S. central bank said its emergency credit programs were not designed to prop businesses up over the long term.
The Main Street Lending Program, announced on April 9 as an option to help U.S. businesses weather the coronavirus outbreak, will be available to a wider array of companies than previously planned.
The Federal Reserve chairman pledged to use every tool at the central bank's disposal to limit the economic fallout from the coronavirus and urged lawmakers to take further action.
The central bank and other agencies have come under pressure to be transparent about their use of funds authorized by the recent pandemic rescue law.