Firm Insights

A brief history:

On April 9, 2020, the Federal Reserve published term sheets for a lending program—known as the Main Street Lending Program—for small and/or mid-size businesses. There were two separate loan programs under the Main Street Lending Program—the Main Street Lending Program and the Main Street Expanded Lending Program.

But on April 30, 2020, after receiving and reviewing public input, the Federal Reserve made adjustments to the Main Street Lending Program and Main Street Expanded Lending Program and added a third loan option.

Expansion of the Main Street Lending Programs:

On June 8, 2020, further changes were made to allow even more small and/or mid-size businesses to participate and receive financial support.

Primarily the Federal Reserve:

• Lowered the minimum loan size from $500,000 to $250,000 for the New Lending Program and the Priority Lending Program loan options
• Increased the maximum loan size for each of the three loan options
  • New Lending Program: from $25 Million to $35 Million
  • Priority Lending Program: from $25 Million to $50 Million
  • Expanded Lending Program: from $200 Million to $300 Million
• Increased the term of a main Street Loan from 4 years to 5 years for each of the three loan options
• Increased the deferral period of principal repayments from 1 year to 2 years for each of the three loan options
• Increased the Federal Reserve’s participation to purchasing 95% of Main Street loans from lenders

For a more comprehensive look at each of the three loans under the Main Street Lending Program, please see our chart here.

Additionally worth nothing, on June 15, 2020, the Federal Reserve announced yet another potential expansion of the Main Street Lending Program, for loans to nonprofit organizations. All terms currently available under the following two Main Street Lending Programs would remain the same for nonprofit organizations—New Lending Program and the Expanded Lending Program—except for eligibility requirements.

Eligibility Requirements:

• Minimum of 50 employees and maximum of 15,000 employees;
• Financial thresholds based on operating performance, liquidity, and ability to repay debt;
• An operational history of at least five years;
• A limit on endowments of no more than $3 Billion; and
• Additionally, each organization must be a tax-exempt organization under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code.