Main Street Lending Program: What The Government is Doing for Mid-Sized Businesses

COVID-19 News and Updates | Prager Metis | Apr 14, 2020

Guidance on Main Street Lending Program

Many have asked what the government has done for medium-sized businesses. On April 9, 2020, details were released by the US Treasury for a $600 billion loan program for businesses with up to 10,000 employees and under $2.5 billion in revenue called Main Street Lending Program and Main Street New Loan Facility. Main Street Lending Program is designed to provide needed liquidity to businesses that do not qualify for PPP loans. 95% of these loans will be purchased by the Federal government from lenders under the program through September 30, 2020. Firms who took PPP loans can also take out a Main Street Lending Program loan.

What Are the Terms?

  • These are 4-year loans to small to mid-sized businesses in good financial standing
  • The minimum loan is $1 million
  • The maximum is the lesser of $150 million or 30% of the Eligible Borrower’s existing outstanding and committed but undrawn bank debt, or (iii) an amount that, when added to the Eligible Borrower’s existing outstanding and committed but undrawn debt, does not exceed six times the Eligible Borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (“EBITDA”)
  • Prepayment is permitted without penalty
  • Adjustable rate of Secure Overnight Financing Rate (SOFR) (0.01% as of April 8, 2020) + 250-400 basis points
  • Principal and interest deferred for one year
  • Eligible banks may originate new loans or use Main Street loans to increase the size of existing loans
  • Businesses must commit to reasonable efforts to maintain payroll and retain workers
  • Loans must comply with compensation, stock repurchase, and dividend restrictions laid out in the CARES Act

If you have any questions regarding Main Street Lending Program loans, PPP loans, or the CARES Act, please contact the Prager Metis Crisis Management team at crisismanagement@pragermetis.com.