Introducing the Main Street Loan Program

On April 9, 2020, the Federal Reserve announced it would provide up to $2.3 trillion in loans to support the economy, in an effort to assist households, employers, and state and local governments during the coronavirus pandemic.

One of the most significant components of this effort is the Main Street Lending Program, which will provide $600 billion in loans through financial institutions to small and mid-sized businesses battling the financial impact of the coronavirus.

Eligible businesses can employ up to 10,000 workers and must have annual revenue of less than $2.5 billion per year. Additionally, eligible businesses must make a reasonable effort to maintain payroll and retain employees during the pandemic.  It’s important to note that businesses who have applied and/or already received funding from the SBA’s Paycheck Protection Program may also receive Main Street Lending Program funding.

***UPDATE July 17th, 2020*** – On July 17, 2020, The Federal Reserve Board voted to modify the Main Street Lending Program to expand access to include nonprofit organizations exempt under IRS code sections 51(c)(3) and 501(c)(19).  The loan terms available are generally consistent with the loans available to for-profit businesses.  Eligible nonprofits must employ a minimum of 10 workers, and non-donation revenues must equal at least 60% of the organization’s expenses.

The Main Street Lending Program will consist of two types of loan facilities:

• The Main Street New Loan Facility will offer borrowers up to the lesser of $25 million or an amount that, when added to borrower existing committed debt, does not exceed four times the borrowers 2019 EBITDA.
• The Main Street Expanded Loan Facility will offer borrowers up to the lesser of $150 million, 30% of the borrower’s existing outstanding and committed bank debt, or an amount that, when added to the borrower’s existing committed debt, does not exceed six times the borrower’s 2019 EBITDA.

As with the creation of any new loan program, there are still many details to be ironed out. The Federal Reserve and U.S. Treasury Departments are reviewing comments and working together to provide more program guidance. The agencies anticipate releasing finalize program details in the next two weeks. We will continue to update this article with new information as it becomes available.

We are committed to providing you with the information and resources you need to make informed decisions for you and the future of your organization. There are many details to consider when deciding if a stimulus program is right for you. We strongly encourage you to talk to your accountant, banker, financial advisor, insurance agents and legal counsel before making any decisions.

Please do not hesitate to contact us with any questions. Stay safe and healthy!