Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

Main Street Lending Program Waiting for Green Light from Congress – What We Know Now

Client Alert
April 17, 2020

What is the Main Street Lending Program?

In response to the COVID-19 pandemic, the Federal Reserve established the Main Street Lending Program (“MSLP”) to enhance support for small and mid-size businesses that were in good financial standing before the pandemic. There are two subcategories to the MSLP: the Main Street New Loan Facility (“MSNLF”), which applies to newly issued loans for a company, and the Main Street Expanded Loan Facility (“MSELF”), which applies to refinancing of existing loans of a company.

The main focus of MSLP is to retain employees (at least 90% of a business’s employees as of February 1, 2020). It is also intended to alleviate slow cash flow stress on profitable businesses.

Which businesses are eligible to apply? A business is an eligible borrower under the MSLP if it is organized in the U.S. or under U.S. laws; it has significant operations in the U.S.; a majority of its employees are based in the U.S.; and it employs 10,000 employees or less, or its 2019 annual revenues do not exceed $2.5 billion.

How much is a loan under MSLP?

  • The minimum loan size is $1 million. The maximum loan size depends on whether the borrower is seeking a MSNLF (new loan) or MSELF (refinance of a loan).  
  • The maximum allowable MSNLF loan is the lesser of (i) $25 million or (ii) an amount that, when added to the borrower’s existing outstanding and committed, but undrawn debt, does not exceed 4x the borrower’s 2019 earnings before interest, tax, depreciation and amortization (EBITDA); 
  • The maximum allowable MSELF loan is the lesser of $150 million, (ii) 30% of the borrower’s existing outstanding and committed but undrawn bank debt, or (iii) an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed 6x the borrower’s 2019 EBITDA.

What is the loan term? The loan term is four years with interest and principal payments deferred for one year.

What is the interest rate on MSLP loans? Interest rate is an adjustable rate of SOFR plus 250-400 basis points.

Is there a fee associated with MSLP loans? Yes, but only for new loans (MSNLF). The borrower must pay the lender an original fee of 100 basis points on the principal of the loan.

Is collateral required? No, for new loans (MSNLF). It is up to the lender’s discretion for refinancing of existing loans (MSELF).

Is there a prepayment penalty? No.

Can a business apply for the MSLP after applying for and receiving a PPP loan? Yes, a business can receive funds from both MSLP and the PPP. But, unlike the PPP loan, no amount of the MSLP loan will be forgiven.  

What about the Primary Market Corporate Credit Facility (“PMCCF”)? No, a business cannot apply for MSLP and the PMCCF funds. It must pick one or the other. Also, a business cannot participate in both MSNLF and MSELF. It must pick one or the other.

How can a company use the MSLP funds? The funds received must be used to retain at least 90% of the borrower’s employees (based on numbers as of February 1, 2020). The borrower must use the funds to employee this 90% number of employees at full compensation and benefits through September 30, 2020. The released guidance does not elaborate on what this means. It simply states that the borrower will use reasonable efforts to restore not less than 90% of its workforce based on February 1, 2020 numbers and all compensation and benefits not later than four months after the emergency.

Are there any compliance issues or use limitations associated with MSLP loans? Yes, a business must make certain certifications/attestations when applying for a loan under MSLP.

There are compensation, stock repurchase, and dividend restrictions for businesses that receive MSLP loans. For example, a business cannot pay dividends or make other capital distributions with respect to common stock until one year after the loan is repaid. There are also several use limitations. For example, the business must commit to refrain from using MSLP funds to repay other loan balances. Also, a lender cannot reduce or cancel existing lines of credit and a borrower cannot seek to do so upon receipt of MSLP funds.

A business should discuss these restrictions with its attorney and lender before applying for the loan to make sure they can actually comply with the many restrictions associated with MSLP loans.

The Federal Reserve’s current term sheet for the MSNLF and MSELF  are found on its website. These terms are subject to change as final guidance is issued. The Federal Reserve received comments from industry leaders through April 15, 2020. Additional guidance is expected in the next few days.

For questions or more information, contact your primary BMD Attorney. 

MSNLFMSELFMain Street Lending Programmid-size businessessmall businessloansSBA LoansCassandra L. MannaBlake R. GerneyChristopher MeagerMSLPMain Street New Loan FacilityMain Street Expanded Loan Facility
Client Alert

Here are the Final Candidates for Mayor of Cleveland

June 17, 2021Earlier this year, current Cleveland Mayor, Frank Jackson, announced he would not run for re-election this fall. With no need to beat an incumbent, the Cleveland mayoral race suddenly became competitive. Thirteen individuals declared their intent to run for mayor. The City of Cleveland, however, has a difficult qualification requirement to run: 3,000 valid signatures from Cleveland residents. The deadline to file a petition to run, with the 3,000 valid signatures, had to be submitted by June 16 (yesterday).Client Alert

What Happens to a Pandemic Stimulus Payment Upon Death?

June 14, 2021On January 1, 2021, the federal government issued stimulus payments (also known as Economic Impact Payments) to American citizens – on paper. However, many of the stimulus payments were not received until several months later. Sometimes the stimulus payments did not arrive until after an individual died.Client Alert

The Masks Are Back: New OSHA Regulations for Healthcare Employers

June 11, 2021Employment Law After Hours is back with a News Break Episode. Yesterday, OSHA published new rules for healthcare facilities, including hospitals, home health employers, nursing homes, ambulance companies, and assisted living facilities. These new rules are very cumbersome, requiring mask wearing for all employees, even those that are vaccinated. The only exception is for fully vaccinated employees (2 weeks post final dose) who are in a "well-defined" area where there is no reasonable expectation that any person with suspected or confirmed COVID-19 will be present.Client Alert

New OSHA Guidance for Workplaces Not Covered by the Healthcare Emergency Temporary Standard

June 11, 2021On June 10, 2021, OSHA issued an Emergency Temporary Standard (ETS) for occupational exposure to COVID-19, but it applies only to healthcare and healthcare support service workers. For a detailed summary of the ETS applicable to the healthcare industry, please visit https://youtu.be/vPyXmKwOzsk. All employers not subject to the ETS should review OSHA’s contemporaneously released, updated Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace. The new Guidance essentially leaves intact OSHA’s earlier guidance, but only for unvaccinated and otherwise at-risk workers (“at-risk” meaning vaccinated or unvaccinated workers with immunocompromising conditions). For fully vaccinated workers, OSHA defers to CDC Guidance for Fully Vaccinated People, which advises that most fully vaccinated people can resume activities without wearing masks or physically distancing, except where required by federal, state, or local laws or individual business policies.Client Alert

Employer Liability for COVID-19 Vaccine Side Effects

June 9, 2021As employers encourage or require employees to obtain a COVID-19 vaccine, they should be aware of OSHA recording obligations and potential workers’ compensation liability. Though OSHA has yet to revise its COVID-19 guidance in response to the latest CDC recommendations, OSHA has revised its position regarding the recording of injury or illness resulting from the vaccine. Until now, OSHA required an employer to record an adverse reaction when the vaccine was required for employees and the injury or illness otherwise met the recording criteria (work-related, a new case, and meets one or more of the general recording criteria). OSHA has reversed course and announced that it will not require recording adverse reactions until at least May 2022, irrespective of whether the employer requires the vaccine as a condition of employment. In its revised COVID-19 FAQs, OSHA states:
Older posts
Newer posts