On April 9, the Department of Treasury and the Federal Reserve published the regulations governing the Main Street Lending Program. This program is funded under the CARES Act and is designed to support small and mid-sized businesses who did not qualify for the Paycheck Protection Program (“PPP”). However, this program may also be available to those that took advantage of the PPP. 

This program is available to companies that employ up to 10,000 workers or with revenues of less than $2.5 billion. According to the Federal Reserve, there will be $600 billion of loans available within 2-3 weeks. 

As of now, we know that the loan terms are as follows: 

• Principal and interest payments will be deferred for one year; 
• The term of the loan is 4 years; 
• The minimum loan size is $1 million. Eligible banks may originate new loans or use main street to increase the size of existing loans; 
• Maximum loan size that is the lesser of (i) $25 million or (ii) four times the Eligible Borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (“EBITDA”) less the Borrower’s existing outstanding and committed but undrawn debt; 
• There is no prepayment penalty; and 
• Adjustable rate of SOFR + 250-400 basis points will be applied to each loan. 

There are restrictions related to compensation, stock repurchase, and dividends that apply to direct loan programs under the CARES Act. And, each borrower will be required to make a series of good faith certifications with respect to each Eligible Loan. 

We are closely following the status of this program and any additional guidance that may be issued. As a business owner, it may be difficult to determine whether or not you may be eligible, and what options are available to you. At General Counsel, P.C. we are happy to talk through these options with you and assist in the process.