Guide to the Main Street Lending Program

Guide to the Main Street Lending Program
Written by Publishing Team

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As a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Federal Reserve created the Main Street Lending Program to provide a total of $600 billion in financing to small and medium-sized businesses.

While the program start date has yet to be announced, here’s what you need to know to check eligibility and prepare to apply.

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1. Am I eligible?

To be eligible for a loan from the High Street Lending Program, a company must:

  • Created before March 13, 2020

  • Not be a ineligible company under Small Business Administration (SBA) regulations

  • It has no more than 15,000 employees or 2019 annual revenue of not more than 5 billion dollars

  • Created or organized in the United States with significant operations in the United States and the majority of its employees in the United States

  • It also does not participate in any other Main Street Loan Facility, in addition to the Core Market Corporate Credit Facility

  • Have not received specific support under CARES (Subtitle A of Title IV for Air Carriers, Air Freight, and Companies of Vital National Security)

All of the above criteria must be met in order to be eligible.

See the Additional Borrower Criteria section for more information.

2. How do I apply?

Eligible borrowers must submit an application and other documents required by the qualified lender. Borrowers should contact the lenders for more information about whether the lender plans to participate in the program and for more information about the application process. Additional information about the application process will be announced in the future.

Qualified lenders are federally secured depository institutions in the United States (including banks, savings associations, and credit unions) as well as any U.S. branch or subsidiary of a foreign bank. Non-bank financial institutions are not considered eligible lenders at this time, although the Federal Reserve is considering options to expand this list in the future.

3. How much can I borrow under this program?

The Main Street Lending Program offers three different secured or unsecured 5-year loan options at an adjustable rate of LIBOR (1 or 3 months) plus 300 basis points with a 2-year principal deferral and 1-year deferred interest payments for eligible borrowers. Unlike Paycheck Protection Program (PPP) loans, Main Street loans are full recourse loans and cannot be waived.

All loans under the Main Street Lending Program must allow prepayment without penalty. All loans are provided by private financial institutions but with the support of the Federal Reserve.

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EBITDA: Earnings before interest, taxes, depreciation and amortization
LIBOR: The London Interbank Offered Rate, a benchmark interest rate indicator

public reports

As with other lending facilities, the Federal Reserve announced that it will follow an extensive reporting procedure on the Main Street Lending Program by submitting monthly reports:

  • Names and details of the participants in each program
  • Amounts borrowed and interest rate charged
  • Total costs, revenues, and fees for each facility

4. Additional criteria for the Borrower

  • If the borrower has loans outstanding with the lender as of December 31, 2019, those loans must have an internal risk rating equivalent to “pass” in the Federal Financial Institutions Examination Board supervisory rating system on that date.

  • In addition, lenders are expected to make an assessment of the financial position of each potential borrower at the time of application.

  • In addition to other certifications required by laws and regulations, the following certifications are required by eligible borrowers:

staff retention

Eligible borrowers who participate in any of the Main Street Lending Program facilities must make commercially reasonable efforts to maintain and retain their payroll during the loan repayment period.

The Federal Reserve further states that in order to make “commercially reasonable efforts,” borrowers must make good faith efforts to maintain payroll and employee retention, given their capabilities, economic environment, available resources, and business need for labor. Businesses that have already laid off or furloughed workers due to COVID-19 are still eligible to apply for Main Street loans.

For more information, check the Federal Reserve Program details and FAQ.

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