Click here for the most up-to-date information as of June 18, 2020.

The Federal Reserve Board has announced an expansion of the scope of and eligibility for its Main Street Lending Program (MSLP). The MSLP is established under Section 13(3) of the Federal Reserve Act and is in response to the unprecedented economic challenges imposed by the COVID-19 pandemic. It is funded, in part, by a $75 billion equity investment in the Main Street Special Purpose Vehicle (Main Street SPV) made by the Treasury Department using monies appropriated from Title IV of the CARES Act.  This SPV will purchase up to $600 billion of participations in eligible loans.

Designed as a lending vehicle to make credit available to businesses in need, the Main Street Lending Program will offer three distinct types of loans to qualifying small and medium-sized businesses. As of May 11, 2020, this program is not yet operational, but the Federal Reserve is currently working on creating the infrastructure to allow the program to commence.

Highlights of the program include the following:

  • Eligible borrowers now include businesses with up to 15,000 employees or 2019 revenues of $5 billion or less (along with additional eligibility requirements as specified in the Term Sheets issued by the Federal Reserve). Nonprofit organizations do not qualify.
  • Businesses may only participate in one of the three loan programs. They may not participate in both the Primary Market Corporate Credit Facility and the Main Street Lending Program.
  • Businesses may not have received “specific support” according to Title IV of the CARES Act (which excludes airline carriers and national security companies).
  • Participation in PPP and MSLP is allowed
  • The loans will require specific certifications and covenants put in place by lenders and as established in the CARES Act. There are fees attached to these loans with pass through to borrowers being at lenders’ discretion (see Term sheets issued by the Federal Reserve for specific requirements).
New Loans
(MSNLF)
Expanded Loans
(MSELF)
Priority Loans
(MSPLF)
Minimum Loan Size$500,000$10,000,000$500,000
Maximum Loan SizeLESSER of $25M OR amount that, when added to outstanding and undrawn available debt, does not exceed 4.0x adjusted 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA)LESSER of $200M, 35% of existing and undrawn available debt OR an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDALESSER of $25M OR amount that, when added to 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 15%; SPV takes 85%
Repayment ScheduleYear 1: No payments but interest is capitalized
Year 2: 33.33%
Year 3: 33.33%
Year 4: 33.33%
Year 1: No payments but interest is capitalized
Year 2: 15%
Year 3: 15%
Year 4: 70%
Year 1: No payments but interest is capitalized
Year 2: 15%
Year 3: 15%
Year 4: 70%

*All Loans have 4-year terms and interest rates of “LIBOR + 3%.”

The Federal Reserve has term sheets for each loan offer as well as a FAQ posted on its website for anyone wishing to learn more specific information.

We are monitoring these developments 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.