Term Sheets Finalized for Main Street Lending ProgramClient Alert
The Main Street Lending Program (“MSLP”) is designed to provide support to small and medium-sized businesses during the current pandemic. The availability of additional credit is intended to help companies that were in sound financial condition prior to the onset of the COVID-19 pandemic maintain their operations and payroll until conditions normalize. The loans will be provided by funds invested by the Department of Treasury. The terms sheets have been finalized for the program, which should be up and running shortly.
Unless extended, the MSLP loans will only be available through September 30, 2020. They are intended to provide longer term credit than the PPP loans and MSLP funds are to be used to enable employee retention. Although MSLP loans are full recourse and non-forgivable, they have very favorable terms such as the deferral of principal and interest payments for the first 12 months of the loan. Also, in certain instances MSLP loans may be unsecured.
There are three types of loans under the MSLP: (1) Main Street New Loan Facility (“New Loan”), (2) Main Street Priority Loan Facility (“Priority Loan”), and (3) Main Street Expanded Loan Facility (“Expanded Loan”). The criteria for eligibility are the same for all three programs. A borrower must meet the following criteria to apply for the program:
- Borrower must have been in business prior to March 13, 2020;
- Borrower must be eligible to receive loans from the SBA as amended by the CARES Act;
- Borrower must be a US business;
- Borrower must make all certifications required;
- Borrower must have less than 15,000 employees or 2019 annual revenues of less than $5 billion;
- Borrower must not be an air carrier that received funding under the CARES Act; and
- Borrower can only participate in one loan program – New Loan, Priority Loan, or Expanded Loan – and cannot participate in the Primary Market Corporate Credit Facility. However, the Borrower is still eligible if it received a PPP loan under the CARES Act.
Each loan type differs based on the borrower’s credit and outstanding debt. The term sheets for each loan can be found at the following links: New Loan, Priority Loan, and Expanded Loan.
Please contact your primary BMD attorney for further questions.