Fed Lowers Minimum Loan Size for Main Street Lending Program, Better Terms for Small to Mid Sized Businesses

On June 8th, The Federal Reserve Board announced changes to the Main Street Lending Program (MSLP), which was designed to help credit flow to small and medium-sized businesses that were in sound financial condition before the COVID-19 outbreak. 

This latest change lowers the minimum loan amount, raises the maximum loan limit, adjusts the principal repayment schedule to begin after two years, and extends the term to five years, providing borrowers with greater flexibility in repaying the loans. 

Related:


Below is a summary comparison and key changes for each of the loans, features and details. Contact your Lurie advisor for guidance and questions.

Main Street Lending Program Loan Options

New Loans

(MSNLF)

Priority Loans

(MSPLF)

Expanded Loans

(MSELF)

Term

5 years

was 4 years

5 years

was 4 years

5 years

was 4 years

Minimum Loan Size

$250,000

was $500,000

$250,000

was $500,000

$10M

unchanged

Maximum Loan Size

The lesser of $35M* or an amount that, when added to outstanding and undrawn available debt, does not exceed 4.0x adjusted 2019 EBITDA

*was $25M

The lesser of $50M* or an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA

*was $25M

The lesser of $300M,* 35% of existing outstanding and undrawn available debt, or an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA

*was $200M

Risk Retention

5%

unchanged

5%

was 15%

5%

unchanged

Collateral

Secured or
unsecured
term loan

Secured or
unsecured
term loan

May be secured by existing or new collateral, participating upsize must be secured pro rata

Payment Terms 

(Principal payment for years one and two is deferred for all three options).

Years 3-5:

15%, 15%, 70%

was 33.33% / year

No prepayment penalty. Interest payments are deferred for one year. 

Years 3-5:

15%, 15%, 70%

unchanged

No prepayment penalty. Interest payments are deferred for one year. 

Years 3-5:

15%, 15%, 70%

unchanged

No prepayment penalty. Interest payments are deferred for one year. 

Rate

LIBOR + 3%

LIBOR + 3%

LIBOR + 3%

Other Frequently Asked Questions

Businesses (that are not “Ineligible Businesses” discussed below in the next drop down) with up to 15,000 employees or up to $5 billion in 2019 annual revenues.

Must be a business that is created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the United States. Affiliation rules apply for employee and revenue eligibility testing.

Adopts list of business not normally eligible for SBA loans (but allows non-profits and religious instruction businesses), e.g. financial lending businesses, passive real estate businesses, life insurance, businesses located in a foreign country and various others.

Need a second set of eyes?

Our CPAs can help you navigate complex PPP loan forgiveness rules including calculation and documentation requirements.

For More Information

Our team will continually update our COVID-19 Information Hub with guidance and resources. In the meantime, please don’t hesitate to reach out to your Lurie advisor with your questions.

We are here to help. Click here to contact us. 

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