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The Main Street Lending Program

Key Provisions and Eligibility Requirements

On April 9, 2020, in response to the current health pandemic, the U.S. Treasury established the Main Street Lending Program (the “Program”), a $600 billion government-backed program that is being administered by the US Treasury under the Federal Reserve Act.  The loans available under the Program are intended for larger businesses that generally do not meet the eligibility requirements of SBA Economic Injury Disaster Loans (“EIDL”) or the CARES Act Payroll Protection Program (“PPP”) loans.  For this reason, loan sizes in this Program will be significantly greater than EIDL or PPP loans.  It should also be noted that there are actually two separate loan facilities in this Program, the Main Street New Loan Facility (“MSNLF”), which is for loans that originate after April 8, 2020, and the Main Street Expanded Loan Facility (“MSELF”), which is for loans that originated before April 8, 2020.

The salient provisions for both the MSNLF and MSELF loans are as follows:

  • Eligible borrowers must have:
    • 10,000 or less employees
    • Annual revenue (for 2019) less than or equal to $2.5 billion
    • Significant U.S. operations and the majority of their employees based in the U.S.
  • Eligible lenders are U.S. insured depository institutions, U.S. bank holding companies, and U.S. savings and loan holding companies
  • Loan terms are typically 4 years (with up to a 1 year deferral), at a rate of SOFR (secured overnight financing rate) plus 250 to 400 basis points (currently approximately 2.5% to 4.0%)
  • Loan sizes:
    • MSNLF – loan sizes range from a $1 million minimum to a maximum of the lesser of $25 million or a borrower’s outstanding/committed but undrawn debt plus annual EBITDA for 2019
    • MSELF – loan sizes range from a $1 million minimum to a maximum of the lesser of $150 million or 30% of the borrower’s existing outstanding/committed but undrawn debt plus 6 times annual EBITDA for 2019
  • Facility fees and fees to lenders apply
  • Businesses that borrowed through the PPP loan program are also eligible for the Main Street Lending program
  • Program is in effect to September 30, 2020

For additional information:
https://www.federalreserve.gov/monetarypolicy/main.htm

For additional assistance, please contact your Gettry Marcus advisor who will work with our COVID-19 Crisis Advisory Task Force to provide additional assistance regarding loan provisions and the respective application processes for Main Street loans, the CARES Act Payroll Protection Program (PPP) loans, and/or the SBA Economic Injury Disaster Loan (EIDL).

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