Another Expansion of the Main Street Lending Program

This article was updated on June 9, 2020.  Further updates will be made as new information becomes available.

Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the COVID-19 pandemic.  On June 8, the Federal Reserve announced that it would expand the Main Street Lending Program (Main Street) to allow more small and medium-sized businesses to be able to receive support.

Here are the changes:

  • Lowering the minimum size for certain loans from $500,000 to $250,000.
  • Increasing the maximum loan size for all facilities.
  • Increasing the term of each loan option from four years to five.
  • Extending the repayment period for all loans by delaying principal payments for two years, rather than one.
  • Raising the Reserve Bank’s participation to 95% for all loans.

The three loan options with updated terms are summarized below:

 

New Loans

Priority Loans

Expanded Loans

Term

Five years

(previously four)

Five years

(previously four)

Five years

Minimum Loan Size

$250,000

(previously $500,000)

$250,000

(previously $500,000)

$10,000,000

Maximum Loan Size

Lesser of $35M or 4x 2019 adjusted EBITDA

(previously $25M)

Lesser of $50M or 6x 2019 adjusted EBITDA

(previously $25M)

Lesser of $300M or 6x 2019 adjusted EBITDA

(previously $200M)

Risk Retention

5%

5%

(previously 15%)

5%

Principal Payment

Deferred two years, years 3-5: 15%, 15%, 70%

(previously years 2-4: 33.33% each year)

Deferred two years, years 3-5: 15%, 15%, 70%

(previously years 2-4: 15%, 15%, 70%)

Deferred two years, years 3-5: 15%, 15%, 70% (previously years 2-4: 15%, 15%, 70%)

Interest Payments

Deferred one year

Deferred one year

Deferred one year

Rate

LIBOR + 3%

LIBOR + 3%

LIBOR + 3%

 

The Federal Reserve states it continues to recognize the critical role played by nonprofit organizations throughout the economy and is working to establish a program for these organizations.

A start date for Main Street will be announced soon.

For more information, see our articles regarding Main Street Frequently Asked Questions:

https://www.schneiderdowns.com/our-thoughts-on/main-street-lending-program-faqs-part-1

https://www.schneiderdowns.com/our-thoughts-on/main-street-faqs-part-2

If you have other questions regarding Main Street, first reach out to your bank and other lenders to see if you can apply for Main Street funding through them.  If you need more information, please reach out to any of your connections at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

Extension of the Main Street Lending Program
Greasing the Skids: Sell-Side Due Diligence
Temporary 100% Deduction of Business Meals Proposed by Senate Republicans
Estate of Jones v. Commissioner
Staying Ahead of The Curve
Main Street Loan Modifications for Not-for-Profit Organizations

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