1 minute read:
On June 8, 2020, the Federal Reserve Board expanded its Main Street Lending Program to include more small and medium sized businesses. See here.
Changes to the Main Street Loan Program include:
• Lowering the minimum loan size for certain loans to $250,000 from $500,000;
• Increasing the maximum loan size for all loan 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 eligible borrower must also certify that a reasonable basis exists that, as of the date of the loan and after giving effect to such loan, the borrower has the ability to meet its financial obligations for at least 90 days and with no expectation of filing for bankruptcy during that period. Although there is no requirement for an attestation that the financing is needed due to COVID-19 circumstances, each borrower is required to make “commercially reasonable efforts to maintain its payroll and retain employees” during the time the loan is outstanding.
Although the Main Street Loan Program has not yet been launched, it is anticipated that the launch will come very soon. During a webinar hosted by the Federal Reserve on June 4, 2020, it was conveyed that the Main Street Loan Program is anticipated to be launched in a matter of days. The launch will be announced on the Federal Reserve website. See here.
The updated Term Sheet and FAQS are found here. See here.
