May 4, 2020

Main Street Lending Program Overview

CARES Act Photo

On April 8, 2020, and then again on April 30, 2020, the United States Department of the Treasury and the Board of Governors of the Federal Reserve System announced new details of their joint “Main Street Lending Program” that is intended to provide additional financing for small- and medium-sized businesses impacted by the ongoing COVID-19 pandemic.

The Main Street Lending Program, alongside the Payroll Protection Program Loan (“PPP”) Economic Injury Disaster Loan (“EIDL”), are part of the recently enacted Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) designed to provide liquidity for eligible business borrowers participating in the program.

Under the Main Street Lending Program, eligible borrowers can take low interest loans in minimum amounts of $500,000 with maximum amounts determined by formulas involving multiples of EBITDA and taking into account existing amounts of indebtedness. Eligible Borrowers should undertake good-faith efforts to maintain payroll and retain employees, in light of its capacities, the economic environment, its available resources, and the business need for labor, but do not have to make attestations as to financial need as a result of COVID-19.

While the Federal Reserve originally published term sheets for two facilities under the Main Street Lending Program on April 8, 2020, on April 30, 2020, the Federal Reserve updated and revised term sheets for three programs, the Main Street New Loan Facility, the Main Street Expanded Loan Facility and the Main Street Priority Loan Facility, and also issued a FAQ.

Companies wishing to apply for a Main Street Lending Program loan must submit an application through an eligible lender, although as of May 4, 2020, the program has not officially launched. The Federal Reserve will be providing updates regarding the program including its launch date on its Main Street page.

The key features of the Main Street New Loan Facility, the Main Street Expanded Loan Facility, and the Main Street Priority Loan Facility are compared in this chart.

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