Main Street Lending Program

Overview

Summary

The MSLP provides low-interest loans of up to $50M – $300M to borrowers. To be eligible you must be a U.S. based business with up to 15,000 employees or no more than $5 billion in 2019 revenues. The loan terms are 5-year loans, adjustable interest rate (LIBOR plus 3%) with 24 months deferred payments while interest accrues. All new loans are unsecured, and the Federal Reserve will purchase loans made by Banks to make it easier for lenders to lend. Apply with your current bank or at any FDIC insured bank or U.S Bank holding company. The Fed’s MSLP is designed to reach larger firms that aren’t able to obtain funding from the PPP, but small businesses—including those that participate in the PPP—are also able to seek loans from the MSLP.

Highlights:

  • Fast Funding

    Businesses can borrow up to $50M for new loans and up to $300M to extend existing loans with lenders to fund operating expenses except paying off loans

  • Great Terms

    Unsecured loans that are purchased from the bank by the Federal Reserve, 5-year loan adjustable interest rate (LIBOR plus 3%).

  • Easy Eligibility

    Any U.S. based business with less than 15,000 employees or less than $5B in revenue

  • Easy Approval Process

    Apply with your current lender or any FDIC bank

Am I

Eligible?

The program is designed for businesses with as many as 15,000 employees or as much as $5 billion in 2019 revenues.

The business must be created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the United States.

Loans originated on or after April 8, 2020, are eligible for the Main Street New Loan Facility (MSNLF), Main Street Priority Loans Facility (MSPLF), or Main Street Expanded Loan Facility (MSELF).

ELIGIBLE

  • U.S. based business

  • Less than 15,000 employees or less than $5B in revenue

How much can I

BORROW?

For the new-loan facility, the maximum loan is $35 million or an amount that, when added to the borrower’s existing outstanding and committed debt, doesn’t exceed four times the borrower’s 2019 earnings before interest, taxes, depreciation and amortization, whichever is less.

Under a second new loan option, called a Priority Loan, lenders would retain a 5 percent share on loans up to $50 million or an amount that when added to existing debt does not exceed six times 2019 earnings before interest, taxes, depreciation and amortization, whichever is less.

For the existing-loan facility, the maximum loan amount is the lesser of $300 million; or an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, doesn’t exceed six times the borrower’s 2019 earnings before interest, taxes, depreciation and amortization.

Will this loan be FORGIVEN?

No, this loan will not be forgiven.

What are the

TERMS?

  • 5-year loans
  • Principal and interest payments can be deferred for 2 years
  • Loans will be priced using the adjustable LIBOR plus 3 percentage points, and there is also an upfront origination fee of 1 percentage point
  • Loans can be paid off early without a penalty

What other restrictions come with these loans?

  • Banks must attest that the proceeds of any loans won’t be used to repay or refinance pre-existing loans or lines of credit they’ve extended to the borrower.
  • Borrowers must commit to refrain from using the proceeds of the new loan to repay other loan balances.
  • Borrowers must attest that they require financing due to challenges prompted by the Coronavirus pandemic and that they will make reasonable efforts to maintain payroll and employees during the term of the loan.
  • Recipients cannot pay dividends or buy back stock during the course of the loan or for 12 months after it has been paid off.
  • Highly paid executives and officers are also prohibited from increasing the pay of any employee whose compensation exceeded $425,000 in 2019.

How to

PREPARE?

  • Contact your bank and ask if they are participating in the program.
  • If you have an existing line of credit or loan from a bank, contact your bank to ask how the process will work to Increase or extend your loan.
  • Use the main street lending program calculator to estimate loan amount
  • Gather financial documents:
    • Payroll filings reported to the IRS for 2019
    • Payroll records supporting your compensation expenses and total workforce numbers
    • Company financials
  • Gather general corporate documents:
    • Business legal name and taxpayer identification number (EIN, SSN)
    • Primary contact (business phone and email address)
    • Certificate of formation Bylaws and Operating Agreements

What will Lenders

Be Looking For?

How will the program work?

The Main Street Lending Program established by the Federal Reserve will leverage U.S. banks to originate eligible loans in which the Federal Reserve will immediately acquire a 95% interest allowing the banks to make loans with almost no risk.

The Fed is creating three lending facilities—two for new loans and one for existing loans. Businesses can obtain financing only from one of the three facilities. Under the programs, an eligible bank will make a loan or reissue part of an existing loan.

This program is available for businesses that were in good financial standing before the crisis, and lenders will be expected to use customary underwriting standard to ensure that these loans are prudently incurred.

Will businesses apply directly to the government for loans?

No. Businesses will work through banks to obtain loans.

How is this different from the Paycheck Protection Program?

The PPP is being administered through the Small Business Administration to provide forgivable loans for businesses with fewer than 500 employees, so that they can pay up to eight weeks of payroll costs.

Can small businesses use the Main Street Lending Program?

Yes. The Fed’s MSLP is designed to reach larger firms that aren’t able to obtain funding from the PPP, but small businesses—including those that participate in the PPP—are also able to seek loans from the MSLP. The minimum loan size is $100,000 and the rates will be higher than on PPP loans.

Where can I find other information about this program?

The Fed has published the term sheets for the new loan, priority loan and existing loan programs.

How do I APPLY?

Apply at a local FDIC lender.

FAQ

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