Main Street Lending Program
As part of the CARES Act, the U.S. Treasury Department and the Federal Reserve Board have established the Main Street Lending Program to facilitate lending to small and medium-sized businesses and nonprofit organizations that were in sound financial condition before the start of the COVID-19 pandemic. The Program offers three different loan options to businesses employing up to 15,000 workers or with 2019 annual revenues of less than $5 billion, and two different loan options to nonprofit organizations with a minimum of 10 employees, who meet certain financial requirements. Unlike the Paycheck Protection Program, the Main Street loans are full-recourse and are not forgivable. [read more]
December 29, 2020
In order to allow more time to process and fund loans that were initially submitted to the Main Street lender portal on or before December 14, 2020, the Federal Reserve Board and Sec. of the Treasury extended the termination date of the Main Street Lending Program to January 8, 2021. The extension does not apply to loans initially submitted after December 14, 2020.
Main Street Lending Program - For-Profit Businesses
The Main Street Lending Program offers three different secured or unsecured five-year term loan options set at an adjustable rate of LIBOR (1 or 3 month) plus 300 basis points with principal and interest payments deferred for one year for eligible borrowers. All loans are made by private financial institutions but backed by the Federal Reserve.
On Monday, June 8, 2020, the Federal Reserve Board expanded the Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support. The changes include:
- Lowering the minimum loan size for certain loans to $100,000 from $250,000 (effective October 30, 2020);
- Increasing the maximum loan size for all facilities;
- Increasing the term of each loan option to five years, from four years;
- Extending the repayment period for all loans by delaying principal payments for two years, rather than one; and
- Raising the Reserve Bank’s participation to 95% for all loans.
The chart below has additional details on the changes.
Term Sheets (as of December 29, 2020)
Main Street Lending Program - Nonprofit Organizations
On July 17, 2020, The Federal Reserve Board announced that it has modified the Main Street Lending Program to provide greater access to credit for nonprofit organizations, including educational institutions, hospitals and social service organizations, that were in sound financial condition before the coronavirus (COVID-19) pandemic.
The Main Street nonprofit loan terms generally mirror those for Main Street for-profit business loans, including the interest rate, principal and interest payment deferral, five-year term and minimum and maximum loan sizes. Nonprofits will be eligible for two loan options (NONLF and NOELF). The minimum loan amount was lowered from $250,000 to $100,000 on October 30, 2020 for the NONLF loan. The chart below has additional details on the final terms.
Borrower eligibility requirements for the nonprofit loan facilities are modified from the for-profit facilities to reflect the operational and accounting practices of the nonprofit sector and include the following:
- has been in continuous operation since January 1, 2015;
- is not an ineligible business;
- meets at least one of the two following conditions: (i) has 15,000 employees or fewer, or (ii) had 2019 annual revenues of $5 billion or less;
- has at least 10 employees;
- has an endowment of less than $3 billion;
- has total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019;
- has a ratio of adjusted 2019 EBIDA to unrestricted 2019 operating revenue, greater than or equal to 2%;
- has a ratio (expressed as a number of days) of (i) liquid assets at the time of loan origination to (ii) average daily expenses over the previous year, equal to or greater than 60 days;
- at the time of loan origination, has a ratio of (i) unrestricted cash and investments to (ii) existing outstanding and undrawn available debt, plus the amount of any loan under the Facility, plus the amount of any CMS Accelerated and Advance Payments, that is greater than 55%;
- is created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the United States;
- does not also participate in the NOELF, the MSNLF, the MSPLF, the MSELF, the Primary Market Corporate Credit Facility, or the Municipal Liquidity Facility; and
- has not received specific support pursuant to the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act).
Additionally, each nonprofit must be a tax-exempt organization under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code. Other forms of organizations may be considered for inclusion under the Facility at the the discretion of the Federal Reserve.
See the footnotes in the term sheets and chart below for additional details on eligibility requirements.
Nonprofit Term Sheets (as of December 29, 2020)
See below for additional resources related to the Main Street Lending Program, including forms and agreements, frequently asked questions and the latest press releases from the Federal Reserve.
The necessary legal forms and agreements (and instructions for completing the required documents) for eligible borrowers and eligible lenders to participate in the MSNLF, MSELF, or MSPLF can be found on the Federal Reserve Bank of Boston’s Main Street Lending Program Forms and Agreements website here.
The Federal Reserve Bank of Boston has published a state-by-state listing of lenders participating in the Main Street Lending Program who are currently accepting applications from new business customers, and also elect to be listed. Interested borrowers can access the lender listing on the program website.
The FAQs are intended to address frequently asked questions about the Main Street Lending Program, including the MSNLF, MSPLF, and MSELF. The Federal Reserve will periodically update these FAQs. Please check the website of the Federal Reserve Bank of Boston for new FAQs or revisions to previously issued FAQs.
» Frequently Asked Questions (as of December 29, 2020)
» Frequently Asked Questions for Nonprofit Organizations (as of December 29, 2020)
» December 29, 2020 | Federal Reserve extends termination date of Main Street Lending Program facilities to January 8, 2021 to allow more time to process and fund loans that were submitted to Main Street lender portal on or before December 14, 2020
» October 30, 2020 | Federal Reserve Board adjusts terms of Main Street Lending Program to better target support to smaller businesses that employ millions of workers and are facing continued revenue shortfalls due to the pandemic
» September 18, 2020 | Federal Reserve Board updates frequently asked questions to clarify the Board and Department of Treasury’s expectations regarding lender underwriting for the Main Street Lending Program
» July 17, 2020 | Federal Reserve Board modifies Main Street Lending Program to provide greater access to credit for nonprofit organizations such as educational institutions, hospitals, and social service organizations
The Federal Reserve Board and Department of the Treasury issued a new FAQ clarifying that Paycheck Protection Program loans of up to $2 million may be excluded for purposes of determining the maximum loan size under the Main Street Lending Program, if certain requirements are met, which should also help smaller businesses access Main Street loans.
» Exclusion of PPP Loan from Main Street “Outstanding Debt” form
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