Federal Reserve and Treasury Launch
Main Street Lending Program to Expand Business Borrowing

COVID-19 Business Update

To facilitate lending to small and medium-sized businesses, the Federal Reserve and Treasury has announced an initiative (the Main Street Lending Program) that will enable up to $600 billion in new financing for eligible borrowers. The program permits eligible lenders (as defined below) to originate new loans to eligible borrowers or increase the size of existing loans to eligible borrowers for borrowings that were originated before April 8, 2020. Borrowers seeking Main Street loans must certify, among other certifications, that it (i) requires financing due to exigent circumstances presented by COVID-19, (ii) will make reasonable efforts to maintain payroll and retain workers and (iii) will follow compensation, stock repurchase and capital distribution restrictions that apply to direct loan programs under the CARES Act.

An eligible borrower is:

• A business with (i) up to 10,000 employees or (ii) up to $2.5 billion in 2019 annual revenues; and
• Created or organized in the United States under the laws of the United States with significant operations in and most of its employees based in the United States.

An eligible lender includes (i) U.S. insured depository institutions, (ii) U.S. bank holding companies and (iii) U.S. savings and loan holding companies.

An eligible loan is an unsecured term loan made by an eligible lender to an eligible borrower with the following features:

• Four (4) year maturity;
• Amortization of principal and interest deferred for one (1) year;
• Adjustable rate of SOFR (currently 0.01%) + 250-400 basis points;
• Minimum loan size of $1 million;
• Maximum loan size for New Loan Facility:
  • The lesser of (i) $25 million or (ii) an amount that, when added to the eligible borrower’s existing outstanding and committed but undrawn debt, does not exceed four (4) times the eligible borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA);
• Maximum loan size for Expanded Loan Facility:
  • The lesser of (i) $150 million, (ii) 30% of the eligible borrower’s existing outstanding and committed but undrawn bank debt, or (iii) an amount that, when added to the eligible borrower’s existing outstanding and committed but undrawn debt, does not exceed six (6) times the Eligible Borrower’s 2019 EBITDA; and
• Prepayment permitted without penalty.