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Main Street Lending Program

04.13.2020

On April 9, 2020, the Federal Reserve announced the preliminary details of the Main Street Lending Program enacted through the CARES Act. The program will be available to borrowers with fewer than 10,000 employees or less than $2.5 billion in revenue. Lenders will be able to originate new loans (the “Main Street New Loan Facility”) or utilize the program to increase existing loans with borrowers (the “Main Street Expanded Loan Facility”). The loans will have a four-year term and will charge interest rates of SOFR + 250-400 basis points, with principal and interest payments deferred for the first year. The principal amounts for the loans will be based on the Borrower’s EBITDA with a cap of $25 million for loans made under the Main Street New Loan Facility and a cap of $150 million for loans under the Main Street Expanded Loan Facility.  Borrowers under the Main Street Lending Program must commit to making reasonable efforts to maintain their workforce and must also comply with compensation, stock repurchase and dividend restrictions. Borrowers with existing Paycheck Protection Program loans will still be eligible for loans made through the Main Street Lending Program.  

The Federal Reserve has committed to purchasing up to $600 billion worth of loans created under the Main Street Lending Program. The details and implementation of the Main Street Lending Program are still being finalized by the Federal Reserve and the Treasury Department. As additional details become available, Koley Jessen will continue to provide updates on the program. The fact sheets prepared by the Federal Reserve for both the Main Street New Loan Facility and Main Street Expanded Loan Facility can be found here: Main Street New Loan Facility and Main Street Expanded Loan Facility.

* The information contained in this document is provided for informational purposes only. It should not be construed as business, legal, accounting, tax, financial, investment or other advice on any matter and should not be relied upon for such.

The information in this document may not reflect the most current developments as the subject matter is extremely fluid and may change daily. The content and interpretation of the issues addressed herein is subject to revision. Koley Jessen, P.C., L.L.O. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this document to the fullest extent permitted by law. Do not act or refrain from acting upon the information contained in this document without seeking professional or other advice.

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