Federal Reserve Main Street Lending Program

The board opened the Main Street Lending program on June 8th for lender registration. Check with your business bank on how to apply. U.S. Businesses may be eligible for loans if they meet either the following conditions: (1) the business has 15,000 employees or fewer; (2) the business has 2019 revenue of $5 billion or less.

There are three main programs being offered with various Term Sheets. Lenders retain a % of each facility as per Term Sheets. Additional information can be found here on the Federal Reserve website.

Main Street New Loan Facility (MSNLF) – Although businesses cannot have received specific support pursuant to Subtitle A of Title IV of Cares Act – PPP business borrowers ARE PERMITTED to borrow provided they are eligible.

• Minimum loan size is $250,000

• Maximum loan size is lesser of either $35M or a max of approximately 4x borrowers EBITDA (factoring in ALL outstanding/undrawn debt)

• Term is 5 years

•  Principal repayment extended to two years, rather than one. Interest only due until the two year mark.

• Rate 3 month LIBOR + 3%, so approximately 3.3%

• No prepayment penalties.

• MSNLF Term Sheet can be found here

Main Street Priority Loan Facility (MSPLF) – Although businesses cannot have received specific support pursuant to Subtitle A of Title IV of Cares Act – PPP business borrowers ARE PERMITTED to borrow provided they are eligible.

• Minimum loan size if $250,000

• Maximum loan size is lesser of either $50M or a max of approximately 6x borrowers EBITDA (factoring in ALL outstanding/undrawn debt)

• Term is 5 years

• Principal repayment extended to two years, rather than one. Interest payments deferred for one year.

• Principal Amortization 15% at end of Year 3, 15% at end of Year 4, and 70% balloon at end of Year 5

• Rate adjustable to 1 or 3 month LIBOR + 3%, so approximately 3.2-3.3%

• No prepayment penalties.

• MSPLF Term Sheet can be found here.

Main Street Expanded Loan Facility (MSELF) – Although businesses cannot have received specific support pursuant to Subtitle A of Title IV of the Cares Act PPP business borrowers ARE PERMITTED to borrow provided they are eligible!

• Minimum loan size is $10M

• Maximum loan size is lesser of either $300M or a max of approx. 6x borrowers EBITDA (factoring in ALL outstanding/undrawn debt)

• Term is 5 years

• Principal repayment has been extended to two years, rather than one. Interest payments deferred for one year.

• Principal Amortization 15% at end of Year 3, 15% end of Year 4, and 70% balloon at end of Year 5

• Rate adjustable to 1 or 3 months LIBOR +3%, so approximately 3.2-3.3%

• No prepayment penalties
   

PPP (Payroll Protection Program)

PPP Flexibility Act provides recipient business owners with some breathing room pertaining to forgiveness. Additional information can be found here on the SBA website.

Some changes to loan forgiveness are as follows:

• The covered period is now 24 weeks (thru 12/31/20) vs. original weeks

• The requirement that 75% must be spent on payroll costs has been decreased to 60%

• You can still elect the 8 week period to apply for forgiveness however the time period to apply for forgiveness has now been extended to 10 months.

• The Headcount test has now been extended to 12/31/20 where documentation required that FTE staffing be brought back up to levels as of 2/15/20, OR must be able to document inability to rehire previous or similarly qualified staff. Exceptions for those businesses that cannot return to normal operations due to compliance with COVID-19 social distancing measures.

• For those loans NOT forgiven, the repayment term has been extended to 5 years (previously two).

• The deadline to apply for the PPP is June 30th.

PPP (Payroll Protection Program)

The EIDL is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Additional information can be found here on the SBA website.

• Applications for the EIDL have re-opened as of June 15th to qualified small businesses and U.S. agricultural businesses.

• Applicants who have already submitted their application will continue to be processed on a first-come, first-served basis.

• The deadline to apply for an EIDL is June 30th.

SBA 7a Loans

As part of SBA's debt relief efforts,

• The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months.

• The SBA will also automatically pay the principal, interest, and fees of new 7(a),504, and microloans issued prior to September 27, 2020

For current SBA Serviced Disaster (Home and Business) Loans: If your disaster loan was in “regular servicing” status on March 1, 2020, the SBA is providing automatic deferments through December 31, 2020. Go here for more information. You can STILL apply for a 7a loan (not forgivable) through your business bank, for more information on those loan programs click here.