On June 8, the Federal Reserve announced a number of changes to the Main Street Lending Program (“MSLP”), involving all three facilities, the Main Street New Loan Facility (“MSNLF”), the Main Street Priority Loan Facility (“MSPLF”), and the Main Street Expanded Loan Facility (“MSELF”). The changes are designed to make MSLP loans available to more borrowers and to reduce the lender’s “skin in the game” on higher-leverage loans. The changes are:
- Lowering the minimum loan amounts for MSNLF and MSPLF to $250,000 from $500,000.
- Increasing the maximum loan amounts as follows:
- MSNLF: $35 million, up from $25 million.
- MSPLF: $50 million, up from $25 million.
- MSELP: $300 million, up from $200 million.
- Extending the loan term for all three loan facilities from 4 years to 5 years.
- Principal deferral increased from 1 year to 2 years for all three facilities. The repayment schedules for MSNLF, MSPLF and MSELF are now 15% in years 3 and 4, and 70% in year 5.
- Reducing the amount of retention the lender must hold for MSPLF from 15% to 5%, the same level as MSNLF and MSELF (even though MSPLF has a higher maximum leverage ratio of 6 x EBITDA, compared to 4 X EBITDA for the other loan facilities.
The Federal Reserve’s announcement can be found HERE.