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With the Main Street Lending Program (“MSLP”) expected to start within days, the Federal Reserve announced important changes aimed at making the loan terms even more favorable to borrowers. The MSLP was created by the CARES Act with the intention of providing loans to small to medium-sized businesses negatively impacted by the COVID-19 pandemic.  The Federal Reserve has been preparing to launch the program since late March with the intention of making the first loans by early June. These last-minute changes to the program make the loans substantially more attractive to borrowers.

Summary of Loan Term Changes:

Additional one-year deferral on principal payments – Borrowers may now defer principal payments for two years (increased from one year) and interest payments for one year.

Increase in loan repayment term – Repayment terms are increased from four years to five years for all loans.

Expansion of loan sizes – Maximum and minimum loan sizes for each of the three debt facilities under the program have been expanded to allow more borrowers to receive support. The changes to each lending facility are as follows:

  • Main Street New Loan Facility (“New Loan”) – Minimum loan size decreased to $250,000 (previously $500,000) and maximum loan size increased to $35 million (previously $25 million).
  • Main Street Priority Loan Facility (“Priority Loan”) – Minimum loan size decreased to $250,000 (previously $500,000) and maximum loan size increased to $50 million (previously $25 million).
  • Main Street Expanded Loan Facility (“Expanded Loan”) – Minimum loan size unchanged from $10 million and maximum loan size increased to $300 million (previously $200 million).

Decrease lender’s required participation in MSLP loans – As part of the program, lenders are required to participate in a certain percentage of each MSLP loan. The changes decreased the participation percentage for lenders from 15% to 5% for certain MSLP loan facilities.

To determine if the Main Street Lending Program for your business, see our previous article for more information or contact us directly to discuss.