Fed Expands Scope of ‘Main Street’ Program

Posted: May 01 2020

The Federal Reserve has expanded the scope of its Main Street Lending Program to accommodate more businesses and more loan options for participating banks. The revised term sheets includes permitting the use of the London Interbank Offered Rate, lowering the minimum loan size somewhat and providing flexibility on the maximum loan size.

Eligible MSLP loans will be originated after April 24 and have a four-year term with a minimum loan size of $500,000 in the Main Street New Loan Facility and Main Street Priority Loan Facility. The minimum size will be $10 million in the Main Street Expanded Loan Facility. In the MSNLF and the MSELF, lenders will retain 5% of the risk on each loan, while retaining 15% in the newly created MSPLF.

The Fed will provide a more flexible calculation method for maximum loan sizes. In the MSNLF, the maximum loan size will be $25 million or four times adjusted 2019 EBITDA, whichever is less; in the MSPLF, it will be the lesser of $25 million or six times adjusted EBITDA. In the MSELF for larger loans, the maximum loan will be $200 million, 35% of outstanding and undrawn available debt or six times adjusted EBITDA, whichever is less. Instead of referencing loans to the Secured Overnight Financing Rate, lenders in all facilities will use Libor plus 300 basis points.

To read more and view the term sheet, visit: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200430a.htm

To read the Fed’s FAQs, visit: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200430a.htm