On Monday, June 15, the Main Street Lending Facility, administered by the Federal Reserve of Boston, officially opened up its lender portal to begin signing up participating lenders. Although the loan intake portal for lenders to submit loan participation requests to the Fed isn’t yet operational, Federal Reserve officials are advising potential borrowers to start contacting lenders if they are interested in securing one of the Main Street loans.

As a quick refresher, there will be three different types of loans a borrower can consider when evaluating whether a Main Street loan is a good option for their business: the Main Street New Loan Facility (“MSNLF”), the Main Street Priority Loan Facility (“MSPLF”), and the Main Street Expanded Loan Facility (“MSELF”).

On June 8, 2020, the Main Street Lending Facility released Main Street Lending Program changes to these loans’ terms, certifications, and legal documents. The below chart shows the most current details available. All loans are available to businesses with up to 15,000 employees or 2019 revenues of $5B or less (along with additional eligibility requirements as specified in the Term Sheets issued by the Fed)

*All loans have five-year terms and interest rates of “LIBOR + 3%”

New LoansExpanded LoansPriority Loans
Minimum Loan Size$250,000$10,000,000$250,000
Maximum Loan SizeLESSER of $35M OR amount that, when added to the outstanding and undrawn available debt, does not exceed 4.0x adjusted 2019 EBITDALESSER of $300M OR an amount that, when added to the outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDALESSER of $50M OR amount that, when added to the outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA
Risk RetentionLender retains 5%; SPV takes 95%Lender retains 5%; SPV takes 95%Lender retains 5%; SPV takes 95%
Repayment ScheduleYear 1:  No payments but interest is capitalized
Year 2:  Principal deferred but interest payments are due
Year 3:  15% Principal + interest
Year 4:  15% Principal + interest
Year 5:  70% Principal + interest
Year 1:  No payments but interest is capitalized
Year 2:  Principal deferred but interest payments are due
Year 3:  15% Principal + interest
Year 4:  15% Principal + interest
Year 5:  70% Principal + interest
Year 1:  No payments but interest is capitalized
Year 2:  Principal deferred but interest payments are due
Year 3:  15% Principal + interest
Year 4:  15% Principal + interest
Year 5:  70% Principal + interest

Other high-level highlights to consider:

  • No nonprofits and no sole proprietorships qualify at this time (Fed is currently evaluating)
  • A business may only participate in 1 of the three loan programs and may not also participate in the Primary Market Corporate Credit Facility – participation in Main Street, EIDL, and PPP is okay!
  • A business may not have received “specific support” under Title IV of the CARES Act (so this program excludes airline carriers and national security companies)
  • The loans will require specific certifications and covenants put in place by lenders and as language in the CARES Act establishes. Some of these could have some teeth for certain eligible borrowers. It is crucial that eligible borrowers read the certifications and term sheets very carefully as some are very restrictive for certain entities.
  • There are fees attached to these loans with pass through to Borrowers being at Lenders’ discretion (see Term sheets for specific requirements)
  • Lenders will use their own loan documentation and underwriting procedures although the Main Street Facility has developed some additional forms that must be included in the loan documentation. Consequently, LENDERS, not the Main Street SPV will ultimately determine what is necessary for qualification (i.e., personal guarantees, owner credit checks, collateral requirements, etc.)

We are monitoring the Main Street Lending Program changes and will issue more information as it becomes available. If you’re not sure if the Main Street Lending Program is right for you, reach out to your CRI advisor for guidance on selecting the best funding option for your business.

Additional Information