Main Street Loan Criteria
The Federal Reserve Board on Monday, June 9th, 2020 expanded its Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support. The Board lowered the minimum loan amount, raised the maximum loan limit, adjusted the principal repayment schedule to begin after two years, and extended the term to five years, providing borrowers with greater flexibility in repaying the loans.
UPDATED [6/9/20] Main Street Loans Eligible Borrower Criteria:
- Lowering the minimum loan size for certain loans to $250,000 from $500,000;
- Increasing the maximum loan size for all facilities;
- Increasing the term of each loan option to five years, from four years;
- Extending the repayment period for all loans by delaying principal payments for two years, rather than one; and
- Raising the Reserve Bank’s participation to 95% for all loans.
Original Main Street Loans Eligible Borrower Criteria:
- You are an eligible borrower if you are a business with up to 10,000 employees
- Your business has up to $2.5 billion in 2019 annual revenues.
- Your business is 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.
- You and your business partners may not also participate in the MSELF or the Primary Market Corporate Credit Facility.
- You must not use the Main Street Loan to repay other loan balances.
- You must attest that you need the Main Street Loan because of financial hardship caused by COVID-19, and that, you will make “reasonable efforts” to maintain payroll and retain employees during the term of the Main Street Loan.
An Eligible Main Street Loan is an unsecured term loan originated on or after April 8, 2020, with the following features:
- 4 year maturity;
- Amortization of principal and interest deferred for one year;
- Adjustable rate of SOFR + 250-400 basis points;
- Minimum loan size of $1 million;
- Maximum loan size that is the lesser of (i) $25 million or (ii) an amount that, when added to the Eligible Borrower’s existing outstanding and committed but undrawn debt, does not exceed four times the Eligible Borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (“EBITDA”); and
- Prepayment permitted without penalty
All Banks in the US are eligible to originate the Main Street Loans.
Read the entire Federal Reserve Press Release HERE: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm