The Main Street Program and the SPV will be funded, in part, with a $75 billion investment from the Treasury Department using funds allocated under Title IV of the CARES Act. These funds, together with funds from the Federal Reserve, will be used to purchase from eligible lenders up to $600 billion of eligible loans under the Main Street Program. 

Eligible Borrowers

Businesses with up to 10,000 employees or $2.5 billion in revenue in 2019 are eligible under the program, so long as other conditions are met. No guidance has been given on how to count employees for purposes of determining eligibility. As set forth in Title IV of the CARES Act, eligible businesses must be created or organized in the U.S., have significant operations in the U.S., and have a majority of their employees based in the U.S.

Businesses that received relief under other parts of the CARES Act—including SBA loan programs and employee retention tax credits—remain eligible under the Main Street Program so long as other conditions are met; however, borrowers that participate in the new facility are not eligible to participate in the expanded facility, and vice versa, as detailed below.

Types of Facilities

The Main Street Program, authorized under Section 13(3) of the Federal Reserve Act, establishes two facilities: (1) a new lending facility to make new loans to borrowers, and (2) an expanded/upsized lending facility  to increase the size of existing loans to businesses. 

Eligible loans under the new facility must be originated on or after April 8, 2020, and the expanded facility must have been originated before April 8, 2020. Except as noted below, loans under either facility will have the following features:

• Four-year terms.
• Collateral:
  • Under the new facility, loans will be unsecured.
  • Under the expanded facility, any collateral already pledged under terms of the original loan will continue to secure the loan; additional collateral may be required at the time of upsizing the loan.
• Amortization of principal and interest deferred for one year.
• Adjustable rate of SOFR + 250-400 basis points.
• Minimum loan size of $1 million.
• Maximum loan size:
  • Under the new facility will be the lesser of (i) $25 million, or (ii) an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed four times EBITDA in 2019 for that borrower.
  • Under the expanded facility will be the lesser of (i) $150 million, (ii) 30 percent of the borrower’s existing outstanding and committed but undrawn bank debt, or (iii) an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed six times EBITDA in 2019 for that borrower.
• CARES Act restrictions on employee and officer compensation, stock repurchases, and distributions apply.
• Prepayment permitted without penalty.
• Origination fee of 100 basis points of the new loan amount or upsized loan amount.
• Additional customary financial covenants must be satisfied.

The following certifications and attestations will be required by each borrower with respect to each loan under the Main Street Program:

• Attest that it will (1) refrain from using the loan proceeds to repay other loan balances, and (2) commit to refrain from repaying other debt of equal or lower priority (other than mandatory principal payments).
• Attest that it will not seek to cancel or reduce any of its outstanding lines of credit with the lender providing the loan (or any other lender).
• Certify that (1) financing is needed due to circumstances related to the COVID-19 pandemic, and (2) the loan proceeds will be used to make reasonable efforts to maintain its payroll and employees during the term of the loan.
• Attest that it will follow compensation, stock repurchase, and capital distribution restrictions that apply to direct loan programs under Section 4003(c)(3)(A)(ii) of the CARES Act.

In addition to the above conditions, under the new facility, a facility fee must be paid by the participating lender to the SPV equal to 100 basis points of the new loan amount purchased by the SPV. The lender may require the borrower to pay the facility fee, in addition to the origination fee set forth above.

The Main Street Program remains subject to final rules and regulations. The Federal Reserve and the Treasury Department will continue to seek input from lenders, borrowers, and other stakeholders. Comments will be received until April 16.

The SPV will stop purchasing eligible loans on September 30, 2020, unless extended.

Municipal Liquidity Facility and Expansion of Other Fed Lending Facilities

In addition to the Main Street Business Lending Program, the Treasury Department also announced these actions using funds allocated under Title IV of the CARES Act:

• A $35 billion investment in the municipal liquidity facility, which will be used to provide up to $500 billion in direct financing to states (and certain counties and cities meeting population requirements), to help ensure that they have the funds necessary to provide essential services to citizens and to respond to COVID-19 issues.
• A $75 billion investment in the primary and secondary market corporate credit facilities (PMCCF and SMCCF), which will be used to purchase eligible corporate debt. Together, the PMCCF and SMCCF will provide up to $750 billion in additional liquidity to eligible participants.
• A $10 billion investment in the expansion of the term asset-backed securities loan facility (TALF), which will be used to facilitate the issuance of asset-backed securities. The TALF will include highly rated, newly issued, collateralized loan obligations (CLOs) and legacy commercial mortgage-backed securities (CMBS) as eligible collateral. TALF will provide up to $100 billion of loans to these markets.