Can we reduce debt by the amount of our PPP loan that will be forgiven? You will have to wait until the loan is actually forgiven, but you should discuss this with your bank so they can consider it as a factor in their decision to lend.
Is there a required personal guarantee? There’s a little gray area with this one. The FED does not require a borrower to personally guarantee the Main Street loan. However, banks do have the final approval, so they may require a guarantee. When looking at the bank you want to get your loan from, use this as you evaluate offers from different banks.
What is the repayment structure? The repayment for the MSLP is different than the common debt instruments. For starters, there is no repayment of principal or interest in the first 12 months, although interest does accrue during this time. The principal is repaid on these schedules:
Month 24 33.33% 15%
Month 36 33.33% 15%
Month 48 33.33% 70%
Interest payments will begin in the 13th month and may be monthly or quarterly.
Can the debt be refinanced? Generally, existing debt cannot be refinanced with MSLP money. Some exceptions would be if the repayment is mandatory and due, but there are still other options available under the MSPLF for debt repayment under the MSLP.
Are you able to use the funds to make distributions to owners? Pass-through entities are able to use the funds to make distributions to owners, which allows them to pay taxes incurred by the business.
What are the requirements to prove that your business has been affected by COVID-19? There is no attestation required of the borrower at this point, as the FED understands the impact of COVID-19 is broad and deep. However, borrowers must be able to show that they were current with liability payments prior to the disruption. They also may need to state that the funds are not available elsewhere, focus on the principal amount, interest rate, repayment terms, etc.
At TGG, we understand that navigating all the COVID-19 resources to understand what program is best for your business. We want to help. Visit our COVID-19 Resource page or click the links below to learn more!