06-25-2020 | Blogs, Business Transactions

Main Street Lending Program

By: BrownWinick


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The Federal Reserve released further information concerning the Main Street Lending Program on June 20th. Three facilities are used to distribute loans: Main Street New Loan Facility (MSNLF), the Main Street Expanded Loan Facility (MSELF) and the Main Street Priority Loan Facility (MSPLF).

The eligibility criteria remain the same across all three facilities. For a business to be eligible for a loan it must either 1) have 15,000 or fewer employees or 2) show that its revenue for 2019 was below $5 billion. Borrowers of the Main Street Lending Program have the option to defer principal payments for two years and interest payments for one year. The loans issued under the program has a maturity date of five years.

The Federal Reserve further clarified that the restrictions on using the loan to pay an existing debt vary depending on the specific loan the borrower is obtaining from the Main Street program. For both the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF) the borrower must agree not to use the loan to pay any part, principal or interest, of an existing debt unless the debt is mandatory and due. However, under the Main Street Priority Loan Facility (MSPLF) the borrower may refinance an existing debt to a lender other than the Federal Reserve at the time of the origination of the loan. Beyond the time of origination, the borrower may not use the loan to pay an existing debt unless it is mandatory and due.

Under the Main Street program, a debt is “mandatory and due” if it the borrower is contractually obligated to pay on a specific date; on that date, the borrower may use the loan to pay the principal or interest. However, under the current program, a borrower may not make principal or interest payment on another loan ahead of its scheduled payment time.

If you have questions about the Main Street Lending Program, please contact your BrownWinick attorney or one of our corporate law attorneys.