U.S. Treasury Secretary Steven T. Mnuchin approved the establishment of a Main Street Business Lending Program to support the flow of credit to American workers, businesses, states, counties and cities impacted by the coronavirus pandemic.
Using funds appropriated under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Treasury will make a $75 billion equity investment in a special purpose vehicle established to implement the Main Street Business Lending Program. This investment will enable up to $600 billion in new financing for businesses with up to 10,000 employees or $2.5 billion in 2019 annual revenues.
“The Main Street Business Lending Program will make a significant difference for the 40,000 medium-sized businesses that employ 35 million Americans,” said Mnuchin. “This important Main Street initiative complements the robust relief efforts already underway such as the Paycheck Protection Program, Employee Retention Credits, and Economic Impact Payments, while protecting taxpayer funds.”
Subject to final rules and regulations, the Main Street Lending Program will support businesses by offering loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion. An eligible loan will be an unsecured term loan that originated on or after April 8, 2020, provided that the loan has the following features:
- Four-year maturity;
- Amortization of principal and interest deferred for one year;
- Adjustable rate of SOFR + 250-400 basis points;
- Minimum loan size of $1 million;
- Maximum loan size that is the lesser of (i) $25 million or (ii) four times EBITDA;
- Prohibit refinancing of pre-existing loans and other financial covenants;
- Prepayment permitted without penalty; and
- Additional customary financial covenants.
