Federal Reserve

Main Street Lending Program: Federal Reserve Updates Terms, Increasing Funding Availability and Borrower Eligibility

On April 9, 2020, the Federal Reserve released terms surrounding the Main Street Lending Program, part of a historic $2.3 trillion loan and liquidity package designed to aid households and small businesses, as well as state and local governments.  Contained in Section 4003 of the CARES Act, the $600 billion in funds available with the Main Street Lending Program is intended to stabilize the economic landscape as we continue to battle the COVID-19 pandemic.

The Main Street Lending Program was designed to support small and medium-sized businesses that were unable to access the Paycheck Protection Program (PPP) or that require additional financial support after receiving a PPP loan. Main Street loans are not forgivable.


On April 30, 2020, the Federal Reserve released revised Main Street Lending Program terms and conditions, increasing borrower options while loosening certain borrower and lender restrictions and limitations.  While the initial Main Street Lending Program contained the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF), last week’s Federal Reserve release added a third option for borrowers in the form of the Main Street Priority Loan Facility (MSPLF).  Eligible loans under each of these facilities are as follows:

  • MSNLF & MSPLF: A secured or unsecured term loan made by an Eligible Lender to an Eligible Borrower that originated after April 24, 2020
  • MSELF: A secured or unsecured term loan or revolving credit facility made by an Eligible Lender to an Eligible Borrower that was originated on or before April 24, 2020, and that has a remaining maturity of at least 18 months.  Note that adjustments made to the loan after April 24, 2020, including at the time of upsizing, must be considered as part of the maturity determination process.

Certain borrower and lender eligibility requirements are listed below:

  • Eligible Lenders: Federally insured depository institution (including a bank, savings association, or credit union, a U.S. branch or agency of a foreign bank, a U.S. bank holding company, a U.S. savings and loan holding company, a U.S. intermediate holding company of a foreign banking organization or a U.S. subsidiary of any of the foregoing).
  • Eligible Borrowers: Eligible businesses that:
    • were established prior to March 13, 2020;
    • meet at least 1 of the 2 conditions – (1) have 15,000 or fewer employees or (2) 2019 annual revenues of $5 billion or less;
    • makes a commercially reasonable effort to maintain payroll and retain employees.
      • Borrowers that have already laid-off or furloughed workers as a result of the disruptions from COVID-19 are eligible to apply for Main Street loans.
    • were created or organized in the United States or under the laws of the United States with significant operations and a majority of its employees based in the United States;
    • participate in only 1 of the 3 Main Street Loan Facilities;
    • do not participate in the Primary Market Corporate Credit Facility; and
    • have not received specific support pursuant to the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)[1].

For purposes of the Main Street Lending Program, eligible businesses must be organized for profit as a partnership, a limited liability company, a corporation, an association, a cooperative, a joint venture with no more than 49% participation by foreign business entities or a tribal concern as defined in the term sheet.  Additionally, businesses listed in 13 CFR 120.110(b)-(j) and (m)-(s), as modified by the PPP regulations on or before April 24, 2020, are ineligible as well.  The Federal Reserve has acknowledged that eligibility modifications may be forthcoming, particularly where not-for-profit businesses are concerned.

In addition to the eligibility requirements detailed above, both lenders and borrowers are required to make certain attestations and certifications:

Lender Certifications & Attestations

  • Commit that it will not request that the Eligible Borrower repay debt extended by the Eligible Lender to the Eligible Borrower, or pay interest on such outstanding obligations, until the Eligible Loan or Upsized Tranche is repaid in full, unless the debt or interest payment is mandatory and due, or in the case of default and acceleration.;
  • Commit that it will not cancel or reduce any of its committed lines of credit to the Eligible Borrower, except in the event of a default.;
  • Certify that the methodology used for calculating the Eligible Borrower’s adjusted 2019 EBITDA for the leverage requirement is the methodology it has previously used for adjusting EBITDA when extending credit to the Eligible Borrower or similarly situated borrowers on or before April 24, 2020.; and
  • Certify that it is eligible to participate in the Facility, including in light of the conflicts of interest prohibition in section 4019(b) of the CARES Act.

Borrower Certifications & Attestations

  • Refrain from repaying the principal balance of, or paying any interest on, any debt until the Eligible Loan is repaid in full, unless the debt or interest payment is mandatory and due.;
    • MSPLF Only: At the time of loan origination, Eligible Borrower may refinance an existing debt to a lender that is not the Eligible Lender
  • Commit to not seek to cancel or reduce any of its committed lines of credit with the Eligible Lender or any other lender.;
  • Certify that it has a reasonable basis to believe that, as of the date of origination of the Eligible Loan and after giving effect to such loan, it has the ability to meet its financial obligations for at least the next 90 days and does not expect to file for bankruptcy during that time period.;
  • Commit to follow compensation, stock repurchase, and capital distribution restrictions that apply to direct loan programs under section 4003(c)(3)(A)(ii) of the CARES Act.; and
    • An S corporation or other tax pass-through entity that is an Eligible Borrower may make distributions to the extent reasonably required to cover its owners’ tax obligations in respect of the entity’s earnings.
  • Certify that it is eligible to participate in the Facility, including in light of the conflicts of interest prohibition in section 4019(b) of the CARES Act.

The chart below details other aspects of the Loan Facilities:










For purposes of the MSNLF & MSPLF, the maximum loan size computation rules stipulate that the EBITDA threshold must take the Eligible Borrower’s outstanding and undrawn available debt into account when determining if the 4x or 6x multiplier is met.

As we await the formal launch of the Main Street Lending Program (expected in early May), including specifics surrounding the application process, interested lenders and borrowers should refer to the FAQs, along with the term sheets.  There is additional information available, including the applicable transaction fees and loan fees, as well as other regulatory requirements and operational details.

[1] Businesses that have received PPP loans are permitted borrowers.

Tune into our webinar on Thursday, May 7th at 10AM for additional information on this topic.  View the invite and register here.

Sax will continue to update you as further details are made available.  Reach out to your Sax advisor or email [email protected] with questions.  For more and on-going information relative to your state and business, visit Sax’s COVID-19 Resource Center.


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