On June 15, 2020, the Federal Reserve Bank of Boston announced the opening of the Main Street Lending Program for lender registration with the improved terms announced last week. The program is intended to benefit small and mid-sized businesses and will operate until September 30, 2020, unless extended by the Federal Reserve.
Loans under the improved program will be geared toward businesses with (i) up to 15,000 employees or (ii) $5 billion or less in 2019 revenues. The program is divided into three categories that allow for a broader set of eligible borrowers and eligible terms summarized in the table below:
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Main Street Lending Program Loan Options
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New Loan
Facility
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Priority Loan
Facility
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Expanded Loan
Facility
|
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Loan Term
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5 years
|
|
Principal Payments
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Principal deferred for two years. Years 3-5: 15%, 15%, 70%
|
|
Interest Payments
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Deferred for one year
|
|
Interest Rate
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Adjustable rate of LIBOR (1 or 3 mo.) plus 300 basis points
|
|
Loan Size
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$250,000
to $35 million
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$250,000
to $50 million
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$10 million
to $300 million
|
|
Maximum Combined Debt to Adjusted 2019 EBITDA
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4 times
|
6 times
|
6 times
|
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Lender Participation Rate
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5%
|
|
Fed Participation Rate
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95%
|
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Prepayment Allowed
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Yes, without penalty
|
|
Business Size Limits
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15,000 employees or fewer, or 2019 revenues of $5 billion or less
|
|
Fees
|
Origination and transaction fees may apply
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Businesses that have received PPP loans are permitted to borrow under the program, provided they are otherwise eligible borrowers.
The program may not be attractive for some lenders, and borrowers and interested parties should carefully consider the pros and cons of participating.
More details about the program, including program forms and FAQs published by the Federal Reserve Bank of Boston, are available on the Boston Fed’s website.
