Changes to Main Street Lending Program Expand Its Reach to More Businesses

Date June 10, 2020
Categories
Article Authors

On June 8, in preparation for the imminent launch of its Main Street Lending Program (MSLP), the Federal Reserve announced updates that expand the program’s reach to more businesses, principally by lowering the minimum and raising the maximum loan size. The following chart, which was included in the Fed’s press release, summarizes the changes:

Main Street Lending Program Loan Options New Loans Priority Loans Expanded Loans
Term 5 years
(previously 4 years)
Minimum Loan Size $250,000
(previously $500,000)
$10M
Maximum Loan Size The lesser of $35M, or an amount that, when added to outstanding and undrawn available debt, does not exceed 4.0x adjusted EBITDA (previously $25M) The lesser of $50M, or an amount that, when added to outstanding or undrawn available debt, does not exceed 6.0x adjusted EBITDA (previously $25M) The lesser of $300M, or an amount that, when added to outstanding or undrawn available debt, does not exceed 6.0x adjusted EBITDA (previously $200M)
Risk Retention 5% 5%
(previously 15%)
5%
Principal Repayment Principal deferred for two years, years 3-5: 15%, 15%, 70%
(previously principal deferred for one year and 33.33% repayment due in years 2-4)
Principal deferred for two years, years 3-5: 15%, 15%, 70%
(previously principal deferred for one year and 15%, 15%, 70% repayment due in years 2, 3, and 4, respectively)
Interest Payments Deferred for one year
RateLIBOR + 3%

Source: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200608a.htm

The MSLP is designed to provide small and medium-sized businesses relief from financial strain caused by the COVID-19 crisis. Interested businesses should review eligibility criteria, as well as program details as of June 8, at the following links:


HBK will continue to provide program updates as they become available. If you have questions, please contact your HBK advisor.

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