The Fed Updates the Main Street Lending Program – as of June 15, 2020
June 16, 2020 – AdvisoriesThe Main Street Lending Program has opened for lender registration as of June 15, 2020, and interested lenders may register using the portal on the Federal Reserve Bank of Boston’s website. This client memo summarizes recent changes to the Program and provides an overview as to where things stand as of the latest guidance, FAQs, and form documents published by the Federal Reserve (the Fed) and the Federal Reserve Bank of Boston (the Boston Fed).
A. Most Recent Updates to Terms.
On June 8, 2020, the Fed announced revised terms to the Main Street Lending Program (MSLP or Program) which will allow even more small and mid-sized borrowers to receive support through the Program. The revised terms include:
- The minimum size for New Loan and Priority loans was decreased to $250,000 from $500,000;
- The maximum loan size for all facilities (subject to compliance with EBITDA requirements) was increased to:
- $35 million for New Loans;
- $50 million for Priority Loans; and
- $300 million for Expanded Loans.
- The term of each facility was increased to 5 years from 4 years. Principal payments are now deferred for the first 2 years, instead of only the first year. Interest payments remain deferred only for the first year. Unpaid interest will be capitalized.
- The amortization schedule for New Loans was revised to match the amortization schedule for the Priority Loans and the Expanded Loans. Now, all loans under the MSLP will amortize as follows:
- 15% of principal will be due in year 3;
- 15% of principal in year 4; and
- 70% of principal due in year 5.
- The Fed’s participation for Priority Loans was increased from 85% to 95% and now matches the New Loans and Expanded Loans. Now, Eligible Lenders will retain 5% of the risk for each type of MSLP facility.