December 7, 2021

Volume XI, Number 341


December 06, 2021

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COVID-19: Federal Reserve Board Expands Terms and Conditions of Main Street Lending Program to Improve Accessibility to Small and Medium-sized Businesses

On June 8, 2020, the Federal Reserve Board (FRB) updated the terms and conditions to the Main Street Lending Program (the Program): the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF and together with MSNLF and MSPLF, the Facilities). In this e-alert, you will find:

  • an updated version of our previously published combined term sheet summarizing and comparing the key aspects of each Facility as of June 8, 2020;

  • summary description of each of the instructions, required certifications, and set of agreements, including links to documents;

  • an updated term sheet summarizing the principal terms of the loan participation by the special purpose vehicle (the SPV) formed by the Federal Reserve Board (FRB) for purposes of the Program; and

  • redline comparison of the June 8, 2020 version of the FRB’s "Frequently Asked Questions" publication (the FAQs) for the Program marked to the version of the FAQs released on May 27, 2020.

Key updates to the Program include:

  • decreasing the minimum loan size for each of MSNLF and MSPLF from $500,000 to $250,000 while increasing the maximum loan size for MSNLF from $25 million to $35 million and for MSPLF from $25 million to $50 million;

  • increasing the maximum loan size for MSELF from $200 million to $300 million and eliminating the 35 pecent sizing test for MSELF so that, as with MSPLF, the only test used to determine the maximum size of a borrower’s MSELF will be a 6x leverage test;

  • increasing the term of all three Facilities from 4 years to 5 years;

  • extending the principal repayment deferral period for all three Facilities from one year to two years; and

  • standardizing the Federal Reserve Bank of Boston’s participation percentage to 95 percent for all three Facilities (thereby increasing the MSPLF participation percentage from 85 percent to 95 percent of a Facility).

On June 15, 2020, the FRB activated its online portal for lender registration in the Program. Lenders can now register through the Program’s lender portal, through which lenders will provide relevant identifying information, and sign and submit required registration forms and agreements for participation in the Program. The link to the FRB’s online lender registration is available here. Once registered for the Program, the FRB encourages lenders to begin making Program loans immediately.

Copyright 2021 K & L GatesNational Law Review, Volume X, Number 167

About this Author

Benay H. Lizarazu Finance Attorney K&L Gates Charlotte, NC

Benay Lizarazu is a partner in the Finance practice and is resident in the Charlotte office. Ms. Lizarazu has extensive experience representing lenders and borrowers in a broad range of corporate middle-market and commercial real estate finance transactions. Her corporate finance experience includes senior, subordinate, second lien, and mezzanine financings for working capital, acquisitions, recapitalizations and other transactions, and capital call lending facilities. She has counseled clients in a wide array of industries, including health care, specialty finance, franchise,...

Christine DeMaere Hoke Finance Attorney K&L Gates Charlotte, NC

Ms. Hoke focuses her practice on commercial lending, corporate finance and private equity and mezzanine finance. She regularly represents both lenders and borrowers in connection with the negotiation of secured and unsecured syndicated credit facilities, asset based loans, and acquisition financings. She has closed financing transactions involving loans and credit facilities ranging in size from $10 million to in excess of $3 billion. She has experience with financings in a variety of industries including healthcare, manufacturing, motorsports, professional services, media and...

Joshua R. Bonney Real Estate Attorney K&L Gates Washington DC

Joshua Bonney is an associate at the firm’s Washington, D.C. office and a member of the real estate investment, development and finance group with a concentration on corporate economic incentive acquirement and tax-advantaged financing transactions.

Joshua represents domestic and foreign inbound entities in connection with the identification and procurement of federal, state, and local subsidization incentives for corporate capital investment programming nationwide. He is part of a team of attorneys that has secured capital investment incentives including cash grants, real property...

Rick Giovannelli attorney

Mr. Giovannelli is a partner in the Charlotte office and focuses his practice on mergers and acquisitions, private equity, corporate finance, including senior debt, mezzanine debt and growth equity, and general corporate matters.

Mr. Giovannelli regularly represents both strategic and financial buyers and sellers of businesses, debt and growth equity investors and other participants in complex buyout, recapitalization and financing transactions. He also represents other businesses on a variety of strategic, financing, and corporate matters....