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Main Street Lending Program Update

June 19, 2020

During the last two weeks, the Federal Reserve Bank of Boston (“FRB Boston” or “Federal Reserve”) has made a number of updates to the Federal Reserve’s Main Street Lending Program (“Main Street” or “Program”). On June 15, the Program opened for lender registration. Prior to that, on June 8, the term sheets for each facility were updated to reflect a number of changes to the facilities, including longer maturities, longer principal deferral, smaller minimum loan sizes, and larger maximum loan sizes. Finally, the Federal Reserve announced that it is working on two facilities designed to support lending to nonprofit organizations.

Lender Registration Opened

Eligible lenders can now register through the lender portal and find the necessary registration documents on the Program website. The FRB Boston is encouraging lenders to begin making Main Street loans immediately as Main Street will begin purchasing loan participations through the portal soon. Borrowers must apply for the Program loans through a participating lender. Information for borrowers can be found here on the FRB Boston website.

Expansion of the Program

Updated term sheets for the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF) and a revised FAQ document for the Program were released on June 8. Please check the Federal Reserve website for updated term sheets and FAQs. The changes to the Program include:

  • Lowering the minimum loan size for two of the facilities;
  • Increasing the maximum loan size for all of the facilities;
  • Increasing the term of each loan to five years;
  • Delaying principal payments for two years; and
  • Raising the SPV's participation to 95% for all loans.

The necessary legal forms and agreements for eligible borrowers and eligible lenders to participate in the three facilities have been updated to reflect the changes. View the updated forms and agreements here. The Program will still accept loans that were originated under the previously announced terms, if funded before June 10, 2020. The chart below has additional details about the facilities.

Terms*

MSNLF

MSPLF

MSELF

Term

5 years (previously 4 years)

Minimum Loan Size

$250,000 (previously $500,000)

$10 million

Maximum Loan Size

Lesser of:

  • $35 million (previously $25 million); or
  • 4x 2019 adjusted EBITDA minus existing outstanding and undrawn available debt**

Lesser of:

  • $50 million (previously $25 million); or
  • 6x 2019 adjusted EBITDA minus existing outstanding and undrawn available debt**

Lesser of:

  • $300 million (previously $200 million); or
  • 6x 2019 adjusted EBITDA minus existing outstanding and undrawn available debt**

(previously, the loan also could not exceed 35% of outstanding and undrawn available pari passu debt)

Required Retention by Eligible Lender

5%

5% (previously 15%)

5% of Upsized Tranche

Principal Repayment (Includes capitalized interest)

15% at the end of year 3 and year 4, 70% at maturity

(previously, for MSNFL, 1/3 at the end of year 2, year 3, and at maturity, and for MSPLF and MSELF, 15% at the end of year 2 and year 3, 70% at maturity)

Interest Payments

Deferred for one year (no change)

Rate

LIBOR (1 month or 3 month) + 3% (no change)

*Please review specific features of the three facilities in the respective term sheets.
** Calculated as of the date of the loan application

Updates Regarding Facilities for Non-Profit Organizations

The Federal Reserve has also announced that it is working on two facilities designed to support lending to nonprofit organizations: the Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF). The Federal Reserve and the U.S. Department of the Treasury will accept comments on these facilities through June 22, 2020.

For Further Information:

We previously circulated a legal alert (available here) outlining the general terms and conditions of the Program. If you have any questions regarding the Main Street Lending Program, please reach out to Erin Simmons or Stephanie Block-Guedez.

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