Eligible Borrowers

To be eligible under either of the Main Street Facilities, a company must:

1. Have no more than 10,000 employees or have had no more than $2,500,000,000 in revenue in 2019 [No guidance whether employee account is an average for a fixed period or includes only full-time equivalents or whether revenue is gross receipts or net of any amounts];
2. Be created or organized in the United States or under US law [No guidance whether a subsidiary of a foreign parent is eligible]; and
3. Have significant operations and a majority of its employees in the United States.

A borrower may not participate in both the New Loan Facility and the Expanded Loan Facility.  Features of the Small Business Administration Payroll Protection Program, including loan forgiveness and affiliation rules, are not applicable to the Main Street Facilities.

Eligible Lenders

 Eligible Lenders are US insured depository institutions, US bank holding companies and US savings and loan holding companies.  [Non-bank lenders, such as private fund direct lenders, are not eligible for this program.  For a borrower whose existing lenders are non-bank lenders, no guidance has been provided whether a bank may join the lender group to make the loan under an Expanded Loan Facility].

Certifications Required of Borrowers

 To participate in either of the Main Street Facilities, a borrower must certify:

1. That it will not use the loan proceeds to repay other loan balances and will not pay other debt of equal or lower priority, except mandatory principal payments, until the Main Street Facility loan is repaid in full [No guidance about permitting a borrower to make regular payments and reborrowings under a revolving line of credit or to pay trade debt];
2. That it will not seek to reduce or terminate any outstanding line of credit;
3. That it requires financing due to exigent circumstances resulting from the coronavirus pandemic and will make reasonable efforts to maintain its payroll and retain its employees during the term of the Main Street Facility loan;
4. That, after incurring a Main Street Facility loan, its total outstanding debt and committed but undrawn debt [including revolving credit and deferred draw term loan availability] does not exceed (a) 4x its EBITDA in the case of a loan under the New Loan Facility and (b) 6x its EBITDA in the case of an upsized tranche under the Expanded Loan Facility [Common add-backs and other adjustments to EBITDA are not recognized];
5. That it will not repurchase its stock if its stock is publicly traded (except to the extent contractually committed prior to the CARES Act) or pay dividends while the Main Street Facility loan is outstanding and for 12 months thereafter [No guidance whether tax distributions from a limited liability company or other tax flow-through entity are permitted or whether dividends from a US subsidiary to a foreign parent for overhead expenses are permitted]; and
6. That, while the Main Street Facility loan is outstanding and for 12 months thereafter, it will not pay any employee (i) whose total compensation (including bonuses, stock awards and other financial benefits) exceeded $425,000 for 2019, more than such employee was paid in 2019 (and any termination benefits for such employee cannot exceed 2x 2019 total compensation) or (ii) whose total compensation exceeded $3,000,000 for 2019, more than the sum of $3,000,000 plus 50% of the excess of total 2019 compensation over $3,000,000.

Eligible Loans

Note that a borrower’s existing credit facilities will typically require waivers or amendments to permit the incurrence of the Main Street Facility loans described below.

A. New Loan Facility

To qualify under the New Loan Facility, a loan must be made by an Eligible Lender to an Eligible Borrower and have the following terms:

1. Four year maturity;
2. One year deferral of principal and interest [No guidance with respect to principal amortization after first year or intervals for interest payments];
3. Adjustable interest rate of SOFR plus 250 to 400 basis points [No guidance whether SOFR is (a) simple or compounded, (b) calculated in arrears or in advance or (c) floating or fixed and for what period];
4. Minimum size of $1 million;
5. Maximum size that is the lesser of: (i) $25 million and (ii) an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed 4x 2019 EBITDA;
6. Prepayment permitted without penalty;
7. Unsecured; and
8. (i) 100 basis point fee on the principal amount payable by the borrower to the lender, (ii) 100 basis point fee on the principal amount payable by the lender to the Fed, which the lender may require the borrower to reimburse and (iii) 25 basis point administration fee of the principal amount per annum payable by the Fed to the lender.

B. Expanded Loan Facility

 To qualify under an Expanded Loan Facility, a loan must be made by an Eligible Lender to an Eligible Borrower under the accordion or incremental loan provisions of a pre-existing term loan facility and have the following terms:

1. Four year maturity [Borrowers must analyze whether Most Favored Nation and other protections for existing lenders will prohibit a new loan that has a shorter maturity or shorter weighted average life to maturity than existing loans under the same credit facility];
2. One year deferral of principal and interest;
3. Adjustable interest rate of SOFR plus 250 to 400 basis points [Borrowers must analyze whether MFN protections for existing lenders permit this interest rate];
4. Minimum size of $1 million;
5. Maximum size that is the least of: (i) $150 million, (ii) 30% of the borrower’s existing outstanding and committed but undrawn bank debt [An Expanded Loan Facility may not be available to a borrower whose revolver or deferred draw term loan facility is provided by a non-bank lender], or (iii) an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed 6x 2019 EBITDA;
6. Prepayment permitted without penalty;
7. Secured on a pari passu basis with the other loans under the existing credit facility; and
8. (i) 100 basis point fee on the principal amount payable by the borrower to the lender and (ii) 25 basis point administration fee of the principal amount per annum payable by the Fed to the lender.

Termination

The Fed will purchase loan participations through the Main Street Facilities until September 30, 2020.