purpose vehicle will pay the eligible lender 25 basis points of the principal amount of its participation in the loan per year for loan servicing.
» The minimum loan size is $1 million; the maximum is the lesser of 1) $25 million and 2) an amount that when added to the business' existing debt does not exceed four times the business' 2019 earnings before interest, tax, depreciation and amortization (EBITDA).
Key details of the MSELF:
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» Permits banks to expand the size of existing term loans.
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» Requires the business to pay the eligible lender an origination fee of 100 basis points of the principal amount of the loan. The special purpose vehicle will pay the eligible lender 25 basis points of the principal amount of its participation in the loan per year for loan servicing.
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» The minimum loan size is $1 million; the maximum is the least of 1) $150 million, 2) 30 percent of the business' existing debt (including committed but undrawn debt), and 3) an amount that when added to the business existing debt does not exceed six times the business' 2019 EBITDA.
FAQ on Main Street Lending Program:
» Can I participate in the MSNLF and the MSELF?
- No, you can participate in one or the other but not both, and additionally participants in the
Main Street Lending Program may not participate in the PMCCF.
» Can I participate in both the Paycheck Protection Program (PPP) and the Main Street Lending Program?
- Yes, you may seek both a PPP and Main Street loan. » Will Main Street loans be secured or unsecured?
- MSNLF loans will be unsecured. For the MSELF loans, any collateral securing an Eligible Loan, whether pledged under the original terms of the Eligible Loan or upon the upsizing related to the MSELF, will secure the loan participation on a pro rata basis.
» Can I use the proceeds of the loans to repay or refinance existing debt?
- No, the eligible borrower must commit to refrain from using the proceeds of the eligible loan (or upsized tranche) to repay other loan balances, and must commit to refrain from repaying other debt of equal or lower priority (other than mandatory principal payments), while the eligible loan is outstanding.
» How long will the program last?
- The special purpose vehicle will cease purchasing participations in eligible loans on Sept. 30, 2020 (unless extended), but the Federal Reserve will continue to fund the special purpose vehicle after that date until the special purpose vehicle's underlying assets mature or are sold.
The Federal Reserve has noted that the Main Street Lending Program is still being finalized.
Read Holland & Knight's full comments to the Secretary of the U.S. Department of the Treasury and the Chairman of the Federal Reserve.