April 15, 2020
On April 9, 2020, the Federal Reserve announced the Main Street Lending Program for businesses impacted by the COVID-19 pandemic. The program will offer 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion. Principal and interest payments will be deferred for one year. Businesses that have taken advantage of the Paycheck Protection Program may also take out loans from the Main Street Lending Program. Borrowers will need to attest that they will follow restrictions around compensation, stock purchases, and capitol distribution that apply to loan program distributed under the CARES Act.
It is anticipated that the new program will result in $600 billion in new or expanded bank loans. The lending program will manage two types of loans. The Main Street New Loan Facility is for new loans with a maximum size of $25 million. The Main Street Expanded Loan Facility is available to fund increases in existing loans with a maximum loans size of $150 million per borrower. Entities are not yet able to apply for these loans. The Federal Reserve and the Treasury are accepting comments submitted to the feedback form until April 16.
Stay up-to-date on COVID-19 emerging issues through the McDermottPlus Coronavirus Resource Center.