Insight

Special Alert | Main Street Lending Program

Updated FAQs to clarify expectations for lender underwriting

Amy S. Matsuo

Amy S. Matsuo

National Leader, Regulatory Insights, KPMG US

+1 919-244-0266

The Federal Reserve Board updated frequently asked questions (FAQs) for the Main Street Lending Program (MSLP) to clarify the Board and Department of the Treasury’s expectations regarding lender underwriting. The revised FAQs emphasize that lender underwriting should look back to the borrower’s pre-pandemic condition and forward to their post-pandemic prospects. The FAQs also clarify supervisory expectations for lenders originating Main Street loans. Specifically, the FAQs for the for-profit facilities (MSLF, MSPLF, and MSELF) and the non-profit facilities (NONLF and NOELF), along with the Instructions for Lender Required Documentation were amended to provide clarity on a variety of issues, including:

  • Emphasizing that lender underwriting should look back to the borrower’s pre-pandemic condition and forward to the borrower’s post-pandemic prospects and clarifying supervisory expectations for lenders originating Main Street loans (FAQs F.3, I.2, and K.4)
  • Providing guidance on completing and submitting Main Street legal documents, and entering data into the Portal, for multi-borrower loans (FAQs H.24, H.25, L.8, L.9, L.12, and M.5)
  • Clarifying the application of the direct loan restrictions on loans between Main Street borrowers and their owners, employees, and officers (FAQs H.20, H.21, H.22, and H.23).

The Federal Reserve Bank of Boston has provided red-lined versions of the FAQs and instructions highlighting the changes made.  The “comparison” files are available here under the September 18, 2020 update.

On September 21, 2020, the Federal Reserve Bank of Boston announced the Main Street SPV will accept loans made to multiple co-borrowers. The revised Main Street FAQs include details regarding co-borrower loans.

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