Expansion of Main Street Lending Program

This article was updated on May 1, 2020.  Updates to this article will be made as new information becomes available.

Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption of the coronavirus (COVID-19).  On April 30, 2020, the Federal Reserve, as part of its efforts to support the economy and small and medium-sized businesses, announced that it was increasing the scope and eligibility for the Main Street Lending Program (Main Street).

After public input, the Federal Reserve made the following changes to Main Street:

  • A third Main Street loan option (Priority Loans) was added, with increased risk sharing by lenders for borrowers with greater leverage.
  • The minimum loan size for New and Priority Loans was decreased from $1,000,000 to $500,000.
  • The pool of businesses eligible to borrow was expanded.  Businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible for Main Street.

There are now three loan options: new, priority and expanded, as detailed below:

  New Loans Priority Loans Expanded Loans
Term 4 years 4 years 4 years
Minimum Loan Size $500,000 $500,000 $10,000,000
Maximum Loan Size Lesser of $25M or 4x 2019 adjusted EBITDA Lesser of $25M or 6x 2019 adjusted EBITDA Lesser of $200M, 35% of outstanding and undrawn available debt, or 6x 2019 adjusted EBITDA
Risk Retention 5% 15% 5%
Payment (year one deferred for all) Years 2-4: 33.33% each year Years 2-4: 15%, 15%, 70% Years 2-4: 15%, 15%, 70%
Rate LIBOR + 3% LIBOR + 3% LIBOR + 3%

The Federal Reserve stated it “recognizes the critical role that nonprofit organizations play throughout the economy and is evaluating a separate approach to meet their unique needs.”  It also stated that it will be evaluating the feasibility of adjusting the loan eligibility metrics for asset-based borrowers.

A start date for Main Street will be announced soon.

The Federal Reserve has addressed Frequently Asked Questions about the Main Street Lending Program.

If you have other questions regarding the Main Street program, first reach out to your bank and other lenders about whether you can apply for Main Street funding through these institutions.  If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com).

Please visit our Coronavirus Resource Center for related content.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

COVID-19’s Impact on Collegiate Athletics
Final 163(j) Regulations a Win for Manufacturers and Private Equity-Owned Businesses
OMB Issues Final 2020 Compliance Supplement
Distance Education Program Compliance Requirements and COVID-19
COVID-19: The Long Road to Recovery
Could your PPP loan affect the sale of your business?

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office
Pittsburgh

One PPG Place, Suite 1700
Pittsburgh, PA 15222

contactsd@schneiderdowns.com
p:412.261.3644     f:412.261.4876

Map of Columbus Office
Columbus

65 East State Street, Suite 2000
Columbus, OH 43215

contactsd@schneiderdowns.com
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102