The Fed’s $2.3 Trillion Main Street Lending Program

In response to the COVID-19 outbreak, on April 9, 2020 the Federal Reserve Board unveiled details about the previously announced Main Street Lending Program designed to get 4-year loans with deferred principal and interest payments to small and mid-sized businesses with up to 10,000 employees or less than $2.5 billion in revenue.

While the Small Business Administration’s Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program were aimed at smaller businesses, the Main Street Lending Program is also open to larger firms needing assistance. Importantly, you can apply for a Main Street Lending Program loan even if you’ve also applied for a loan under the PPP, but you cannot apply if you participate in other programs such as the Main Street Expanded Loan Facility (MSELF) or the Primary Market Corporate Credit Facility.

ELIGIBILITY REQUIREMENTS

  • U.S. business with up to 10,000 employees or less than $2.5 billion in revenue in 2019.
  • In good financial standing prior to the COVID-19 outbreak.
  • Must make reasonable efforts to maintain payroll and retain workers.
  • Must follow all applicable restrictions that apply to direct loan programs under the CARES Act, i.e., compensation, stock repurchase, and dividend repurchase restrictions.

WHERE, HOW AND WHEN CAN YOU APPLY?

  • U.S. insured depository institutions, U.S. bank holding companies, and U.S. savings and loan holding companies are eligible to be lenders.
  • No details are available yet about when you can apply or the application process, which is likely to vary from lender to lender. Applications could be through a portal or, in the case of smaller banks, an application form with supporting documentation.
  • We advise to begin preparing now by gathering information about your 2019 IRS payroll filings, all payroll records supporting compensation figures and total workforce numbers. In short, pull together any information that helps you make the case for why the loan is needed.

Eligible Loans Under the Main Street New Loan Facility

  • Four-year maturity
  • Amortization of principal and interest deferred for one year
  • Adjustable interest rate of the Secured Overnight Financing Rate (SOFR) + 250-400 bps
  • Minimum loan size of $1 million
  • Maximum loan size equal to the lesser of (i) $25 million or (ii) an amount that, when added to the borrower's existing outstanding and committed but undrawn debt, does not exceed 4x 2019 EBITDA
  • No early prepayment penalty

Eligible Loans Under the Main Street Expanded Loan Facility

  • Four-year maturity
  • Amortization of principal and interest deferred for one year
  • Adjustable interest rate of the Secured Overnight Financing Rate (SOFR) + 250-400 bps
  • Minimum loan size of $1 million
  • Maximum loan size equal to the lesser of (i) $150 million, (ii) 30% of the borrower's existing outstanding and committed but undrawn bank debt or (iii) an amount that, when added to the borrower's existing outstanding and committed but undrawn debt, does not exceed 6x 2019 EBITDA
  • No early prepayment penalty

SBA Task Force

Andy  Alan

Andy Alan

Director

  • Advisory
  • Fort Lauderdale, FL
Robert  Cohen

Robert Cohen

Partner

  • Tax & Business
  • Deerfield, IL
Thomas J. Filomeno

Thomas J. Filomeno

Office Managing Partner

  • Tax & Business
  • West Hartford, CT
Aaron  Fox

Aaron Fox

Director

  • Tax & Business
  • Washington, DC
Ronald  Friedman

Ronald Friedman

Partner

  • Assurance
  • Los Angeles, CA
John  Heller

John Heller

Director

  • Advisory
  • Fort Lauderdale, FL
Richard A. Izzi

Richard A. Izzi

Partner

  • Advisory
  • New York, NY
Jordan M. Kendall

Jordan M. Kendall

Partner

  • Tax & Business
  • Philadelphia, PA
Michael  Maksymiw, Jr.

Michael Maksymiw, Jr.

Partner

  • Tax & Business
  • West Hartford, CT
Kellan  McConnell

Kellan McConnell

Director

  • Assurance
  • Costa Mesa, CA
Dawn  Minotas

Dawn Minotas

Managing Director

  • MS&C - Financal
  • Cleveland, OH
Joseph  Waddington

Joseph Waddington

Partner

  • Tax & Business
  • Philadelphia, PA