Federal Reserve Releases Additional Information On Its Main Street Lending Program
After much anticipation, the Federal Reserve Thursday released additional information about its Main Street Lending Program (MSLP). Specifically, the central bank announced various changes related to the scope of and eligibility for the program, including by:
— Creating a third loan option, with increased risk sharing by lenders for borrowers with greater leverage.
— Lowering the minimum loan size for certain loans from $1 million to $500,000; and
— Expanding the pool of businesses eligible to borrow:
— Businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, which is up from 10,000 employees and $2.5 billion in revenue under the original terms.
— In its announcement, “[t]he Board recognizes the critical role that nonprofit organizations play throughout the economy and [indicates that it] is evaluating a separate approach to meet their unique needs.
By way of reminder, the Federal Reserve announced this 13(3) facility on April 9 and accepted comments on its proposed term sheets through April 16. In total, more than 2,200 comments were submitted, ultimately resulting in a new, third loan option (Priority Loans).
The central bank also released a set of Frequently Asked Questions, which addresses a number of key issues, including loan eligibility, the application process and various other terms and conditions.
In its announcement, the Federal Reserve indicated that it soon plans to announce a date when the MSLP will officially be operational. The Treasury Department will support the MSLP with $75 billion in funding authorized by the CARES Act.