MAIN STREET LENDING PROGRAM PORTAL FOR LENDERS- NOW OPEN

The Federal Reserve Board (FRB) rolled out another program to help the small to medium-sized business owners who require loans to help recover and adapt to the recent impacts of the COVID19 pandemic through eligible lenders. This program is to aid businesses in sound financial status before the crisis.

FRB recently introduced the Main Street Lending Program that works with three main loan facilities as follows:

1. Main Street New Loan Facility (MSNLF) Loan Amount: $250,000.00 -$ 35,000,000.00
2. Main Street Priority Loan Facility (MSPLF) Loan Amount: $250,000.00 – $ 50,000,000.00
3. Main Street Expanded Loan Facility (MSELF) Loan amount from $10,000,000.00 to $300,000,000.00.

Qualified lenders will be conducting customary underwriting standards. Businesses will work through these banks for the loans and will not apply directly to the Government.

Who are eligible to borrow?

• Business applicant must have 15,000 employees or less, or 2019 revenues of $5 billion or less
• Business applicant must have been legally established in the U.S. before March 13, 2020
• Business applicant must have been in sound financial shape before the pandemic
• It is not clear if a sole proprietorship qualifies as an eligible business
• Non-profit organizations are not eligible for these loans
• Businesses in certain financial sectors such as lenders, banks, and life insurance companies are ineligible
• Passive businesses owned by developers and landlords are ineligible
• Businesses that participated in the SBA’s PPP can apply for a Main Street loan
• Businesses that received an SBA EIDL can apply for a Main Street loan
• Businesses participating in the Primary Market Corporate Credit Facility are ineligible

Basis of approved loan is the business’s 2019 EBITDA. New loan borrowers can avail 4x of their EBITDA, 6x of EBITDA for Priority Loans, and 6X or 35% of existing but undrawn bank debt for borrowers with existing loans. These loans are full-recourse and unforgivable. Payment terms and interest as follows:

• Five-year payment with interest rates based on LIBOR ( 1 or 3 months) +3%
• The interest rate will be in deferred payments for the first year.
• Deferred payment for principal amount starts during the first and second years.
• 15% Principal Schedule Amortization in the 3rd and 4th year.
• 70% Principal Scheduled Amortization at the end of the fifth year.

To get started, documents needed are as follows:

1. Financial statements and Tax Return filings reported to the IRS from the year 2017-2019.
2. Personal financial statement of owners, owning more than 25% shares or more of the business.
3. Business General Information:
   • Business legal name and taxpayer identification number (EIN, SSN)
   • Registered Contact Numbers and Email Address
   • Certificate of Formation
   • Bylaws and Operating Agreements

Also, under the Main Street Lending Program, two more facilities are being established to support non-profit organizations. These are the Nonprofit Organizations New Loan Facility and the Non-Profit Organization Expanded Loan Facility.

If you are interested in learning more about the Main Street Lending Program, and are keen to know your options with this new program, feel free to book a commitment-free consultation with a finance professional at https://calendly.com/levine-and-associates.