The lender portal for the Federal Reserve’s Main Street Lending Program has opened after weeks of delays. Unlike the Paycheck Protection Program (PPP), the Main Street Lending Program’s loans are not forgivable, although they are at low interest rates. The program is being offered through the Federal Reserve rather than the SBA and has a minimum loan size of $250,000, with a term of five years.
The Federal Reserve and the Treasury are also considering expanding the program to nonprofit organizations in addition to businesses.
So far, only the lender portal has gone online this week, but the program has not yet been opened to borrowers. For more information on the program, visit the Federal Reserve Board’s website or the Federal Reserve Bank of Boston’s website. Click on the following link to access the frequently asked questions page.
Below is a summary of the key components of the Main Street Lending Program:
|Program||Main Street Lending
New Loan Program
|Main Street Lending Priority Loan Program||Main Street Lending Expanded Loan Program|
|Minimum amount of the loan||$250,000||$250,000||$10,000,000|
|Maximum amount of the loan||The lesser of $35M or an amount that, when added to outstanding and undrawn available debt, does not exceed 4.0x adjusted 2019 EBITDA||The lesser of $50M or an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA||The lesser of $300M, 35% of existing outstanding and undrawn available debt, or an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA|
|Interest Rate*||LIBOR (one month or three month) (6/10/2020 0.30%) + 300 basis points|
|Loan Term||Five years with two years of principal payment deferred, interest-only payments required to be paid during the second year of the term, interest will accrue and compound throughout the term of the loan.|
|Payment principal terms||Years Three to Five- 15%, 15%, 70%|
|Program limits||Can participate with the PPP program but can’t have more than one Federal Reserve program loan outstanding and cannot have received specific support under the CARES Act (ie. Airlines, etc)|
|Collateral required||Can be secured or unsecured||Can be secured or unsecured||Can be secured or unsecured. If the original loan that is being expanded upon is collateralized, the underlying collateral will be allocated on a pro-rata basis with the Main Street Lending Tranche|
|Term of program||The special purpose vehicle will stop buying loans on September 30, 2020|
The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.