Minimum Loan Size
|
$500,000
|
$500,000
|
$10 million
|
Maximum Loan Size
|
Lesser of (1) $25 million or (2) an amount that, when added to existing outstanding and undrawn debt, does not exceed 4x 2019 adjusted EBITDA.
|
Lesser of (1) $25 million or (2) an amount that, when added to existing outstanding and undrawn debt, does not exceed 6x 2019 adjusted EBITDA.
|
Lesser of (1) $200 million, (2) 35% of outstanding and undrawn available debt that is pari passu in priority with the Eligible Loan and equivalent in secured status, or (3) an amount that, when added to existing outstanding and undrawn debt, does not exceed 6x 2019 adjusted EBITDA.
|
Security
|
May be secured or unsecured.
|
May be secured or unsecured, but any collateral that secures the underlying loan must secure the upsized tranche on a pari passu basis.
|
Priority
|
Must not be contractually subordinated in terms of payment priority to any of the borrower’s other debt.
|
Must not be contractually subordinated in terms of payment priority to any of the borrower’s other debt.
Must be senior to or pari passu with, in terms of priority and security, the borrower’s other debt, other than mortgage debt (i.e., debt secured by real property).
Additional information on the priority rules is provided in FAQ #8 below.
|
Term
|
Four years
|
Repayment
|
Principal and interest deferred for one year. Deferred and unpaid interest will be capitalized. Principal payments of one-third at end of years two, three, and four.
|
Principal and interest deferred for one year. Deferred and unpaid interest will be capitalized. Principal payments of 15%, 15%, and 70% at end of years two, three, and four, respectively.
|
Voluntary Prepayment
|
Permitted without penalty.
|
Mandatory Prepayment
|
Each Main Street loan must contain a provision that requires prepayment if borrower breaches certain covenants or makes a material misstatement with respect to certain certifications.
|
Interest Rate
|
LIBOR (one or three month) + 3.00%
|
Fees
|
- 1.00% transaction fee paid by originating lender - fee may be passed on to borrower.
- Up to 1.00% origination fee paid by borrower.
- 0.25% servicing fee paid by federal government to lender.
|
- 0.75% transaction fee paid by originating lender—fee may be passed on to borrower.
- Up to 0.75% origination fee paid by borrower.
- 0.25% servicing fee paid by federal government of FRB to lender.
|
Participation Percentage
|
FRB to purchase 95% participation interest.
|
FRB to purchase 85% participation interest.
|
FRB to purchase 95% participation interest.
|
Covenants (Compensation)
|
Until 12 months after loan has been repaid:
- Officers and employees whose total compensation exceed $425,000 in calendar year (CY) 2019 may not:
- Receive total compensation during any consecutive 12-month period in excess of the total compensation received in CY2019.
- Receive severance pay or other benefits upon termination of employment in excess of 2x the total compensation received in CY2019.
- Officers/employees whose total compensation exceeded $3 million in CY2019 may not receive total compensation during any consecutive 12-month period in excess of (1) $3 million, plus (2) 50% of excess over $3 million of total compensation received in CY2019.
“Total compensation” includes salary, bonuses, awards of stock, and other financial benefits.
|
Covenants (Restricted Payments)
|
Until 12 months after loan has been repaid:
- The borrower may not repurchase listed equity securities (including securities issued by the borrower’s parent), except to the extent required under a contractual obligation in existence as of March 27, 2020.
- The borrower may not pay dividends or make other capital distributions with respect to the common stock of the business (other than tax distributions by S corporations and other pass-through entities).
|
Covenants (Debt Repayments)
|
- No payments may be made on other debt (other than payments that are mandatory and due) until loan has been repaid. However, the borrower may refinance other debt at the time of origination of a loan under the Priority Loan Facility.
- Payments on other debt are considered “mandatory and due” (1) on the future dates upon which they were scheduled to be paid as of April 24, 2020, or (2) upon a mandatory prepayment event under a contract for indebtedness executed prior to April 24, 2020, (except that any such prepayments triggered by the incurrence of new debt can only be paid (i) if such prepayments are de minimis, or (ii) under a loan under the Priority Loan Facility at the time of origination of such loan).
- No cancellation or reduction of any committed lines of credit is permitted.
|
Covenants (Retaining Employees)
|
Borrower must make commercially reasonable efforts to retain employees during the term of the loan. In the Main Street Program FAQ guidance, the FRB states that a borrower “should undertake good-faith efforts to maintain payroll and retain employees, in light of its capacities, the economic environment, its available resources, and the business need for labor.” Borrowers that have already laid off or furloughed workers as a result of the disruptions from COVID-19 are eligible to apply for the Main Street Program.
|
Covenants (Financial Reporting)
|
Borrowers must comply with robust annual and quarterly reporting requirements that are more detailed than required by many customary credit agreements.
Model language for such covenant is provided on page 52 of the Main Street Program FAQ guidance. [2]
|
Must include the same annual and quarterly reporting requirements as loans under the New Loan Facility and Priority Loan Facility, except that for loans under the Expanded Loan Facility that are part of multi-lender credit facilities, a financial reporting covenant that was negotiated in good faith prior to April 24, 2020, will be deemed sufficient.
|
Cross-Acceleration
|
Each Main Street loan that is part of a bilateral facility must contain a cross-acceleration provision, triggering an event of default under the Main Street loan if any debt owed by a borrower to the lender or any affiliate of the lender is accelerated.
Model language for such cross-acceleration provision is provided on page 50 of the Main Street Program FAQ guidance. [3]
|
Must include the same cross-acceleration provision as loans under the New Loan Facility and Priority Loan Facility except that for loans under the Expanded Loan Facility that are part of multi-lender credit facilities, a cross-default or cross-acceleration provision that was negotiated in good faith prior to April 24, 2020, will be deemed sufficient.
|