Main Street Lending Program
The Federal Reserve Board (FRB) announced that it is expanding the terms for the Main Street Lending Program, which is intended to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic. Now:
- The program is open to certain businesses with up to 15,000 employees or up to $5 billion in annual revenues where previously these numbers were limited to 10,000 employees and $2.5 billion in revenue.
- Loans may be secured or unsecured, where previously they were only unsecured.
- The minimum loan size for the Main Street New Loan Facility (MSNLF) has been reduced to $500,000 from the previous $1 million.
- The maximum loan size for the Main Street Expanded Loan Facility (MSELF) has been increased to the lesser of $200 million from the previous $150 million or 35 percent of existing debt, up from 30 percent.
The announcement included the addition of a new, third lending option, the Main Street Priority Loan Facility (MSPLF), which will have a higher maximum loan amount compared to the MSNLF but also require lenders to retain a 15 percent share of the loans.
Notably, for all three facilities under the Main Street Lending Program, the rate on the loans has been changed to now tie to LIBOR, where previously they were tied to SOFR. This change, as explained in the Frequently Asked Questions attached to the press release, is attributed to feedback from potential participants regarding challenges with switching systems to the new benchmark.
The FRB acknowledged that it was considering establishing a separate lending option for nonprofit organizations.
A start date for the program has not yet been set.
Also this week:
- The Treasury and the SBA issued a joint statement to alert participants in the Paycheck Protection Program that SBA will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Regulatory guidance implementing this procedure is forthcoming.
- The FRB announced expansion of the eligibility and duration of the Municipal Lending Facility (MLF). In particular, the changes lower the population thresholds for eligibility to borrow from the MLF, provide eligibility to certain multi-state entities, and lengthen the duration for eligible notes from 24 months to 36 months.