The Federal Reserve announced it is expanding the Main Street Lending Program by offering businesses a new loan option called the Main Street Priority Loan Program. We detailed the other two loan options – (a) the Main Street New Loan Facility and (b) the Main Street Expanded Loan Facility – in our prior fact sheet located here.
The new Main Street Priority Loan expand*s the scope and eligibility of the prior two loans since it:
Additionally, businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, compared to the prior two loan terms, which were for companies with up to 10,000 employees and $2.5 billion in revenue. Also, the minimum loan size was lowered to $500,000 from $1 million. With these changes, the program now offers more loan options for small and medium-sized businesses.
What Businesses are eligible for loans under the Main Street Priority Loan Program?
While restrictions apply to businesses that received certain loans under the CARES Act, PPP Loan Borrowers remain eligible for Main Street Lending Program loans. Businesses that meet all of the criteria below are eligible for a loan under the Priority Loan Program:
What are the terms of a Main Street Priority Loan?
These are the terms of a Main Street Priority Loan:
What Certifications and Covenants do Businesses have to provide to obtain a Priority Loan?
In addition to certifications required by law, the following certifications and covenants are required from borrowers, which lenders will collect at the time of loan origination:
When will the New Main Street Priority Loan Program start and end?
The start date of the Main Street Priority Loan Program has not yet been announced but businesses are advised to start preparing their loan documentation and contact their lender for any additional documentation needed and get in the loan queue. As of now, this program will end on September 30, 2020, unless the Treasury Department extends the loan program. The Treasury Department may also make changes to any of the above Priority Loan terms and provision.
The Federal Reserve has developed a great loan comparison resource available here.
Monisha Coelho represents clients – from startups to multinational corporations – in a wide range of business, corporate, and real estate matters before state and federal courts, in mediations and arbitrations. She counsels clients on contract drafting and negotiations. Monisha is licensed to practice law in India and advises clients on cross-border US-India business transactions and litigation.
DISCLAIMER: The information contained herein is intended for informational purposes only and should not be construed as professional counsel or legal advice. Seek legal counsel for advice with respect to any legal matter. The information in this document may not reflect the most current developments as the subject matter is extremely fluid and may change daily. The content and interpretation of the issues addressed herein are subject to change.