The long-awaited Main Street Lending Program (the “Program”) opened on July 6, and on July 8, the Federal Reserve Board published a list of participating lenders that are accepting new customers seeking Program loans.
The Program provides loans and loan expansions to increase liquidity to U.S. businesses with either 15,000 or fewer employees or $5 billion or less in 2019 revenue, which were in good financial condition before the onset of the COVID-19 pandemic. Unlike PPP loans, Program loans are not forgivable. Originating banks will also share in some of the loan risk by retaining a 5% share of each Program loan they generate.
Three different loan types are available under the Program. The minimum and maximum loan sizes differ by loan type, with minimums start at $250,000. Principal repayment under all three types of loans is deferred for the first two years and interest repayment is deferred for the first year. The interest rate across the Program is LIBOR + 3%.
A summary of terms of the Program, published by the Federal Reserve, is shown below. Additional details are also available in our prior posts about the Program (available here, here, and here) and on the Program webpage.
Source: Federal Reserve Board
Companies interested in receiving loans or loan expansions through the Program should contact a participating lender. Each lender will use its own loan applications for Program loans, and will apply both the Program standards and the lender’s own underwriting standards.
The Program is not currently open to nonprofits, but the Federal Reserve is evaluating an expansion to nonprofits. The terms of the Program expansion are still under development, but the Fed’s current proposal would make loans of $250,000 to $1 million available to certain nonprofits with more than 50 and fewer than 15,000 employees. Additional details are available in this press release and will be released as the Program expansion moves forward.
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FOR MORE INFORMATION
For more information about the Main Street Lending Program, please contact your attorney at Gravel & Shea PC or any of the following attorneys at the firm: Chip Mason (cmason@gravelshea.com), Cassandra LaRae-Perez (claraeperez@gravelshea.com), Oliver Goodenough (ogoodenough@gravelshea.com), Keith Roberts (kroberts@gravelshea.com), Pauline Law (plaw@gravelshea.com), or Catherine Burke (cburke@gravelshea.com).
