Federal Reserve Announces Expansion to Main Street Lending Program (MSLP), Seeks to Facilitate More Lending to Small and Medium-Sized Businesses
On June 8, 2020, the Federal Reserve (the Fed) announced an expansion to its Main Street Lending Program (MSLP) to allow more small and medium-sized businesses to utilize the program. Among other things, the Fed generally decreased minimum loan thresholds, increased maximum loan limits, adjusted principal repayment schedules and extended the maturity of MSLP loans. The Fed also issued updated MSLP facility term sheets and Frequently Asked Questions (FAQs) and announced that it anticipates the MSLP will be open for lender registration soon.
Among the key changes to the MSLP announced by the Fed include the following:
- For both the Main Street New Loan Facility (MSNLF) and the Main Street Priority Loan Facility (MSPLF), the minimum loan amount was reduced from $500,000 to $250,000
- The maximum loan limit for the MSNLF was increased from $25 million to $35 million
- The maximum loan limit for the MSPLF was increased from $25 million to $50 million
- The maximum loan limit for the Main Street Expanded Loan Facility (MSELF) was increased from $200 million to $300 million
- The maturity of all MSLP loans was extended from four years to five years
- The deferral period for principal payments for all MSLP loans was extended from one year to two years
- The Fed’s participation in MSPLF loans was increased from 85% to 95%, so that all MSLP loans now reflect a 95% participation rate by the Fed
The Fed did not modify the interest deferral period (one year) or interest rate (LIBOR + 3.00%) applicable to all MSLP loans. The Fed is now in the process of updating its participation agreement and other legal forms to align with the changes summarized above.
On Thursday, June 11, 2020, Loic Dimithe, Chelsea Austin and Erik Daly will lead a webinar to discuss these latest updates to the MSLP as well as several new FAQs released by the Fed in more detail. We welcome you to register for the webinar here: https://bit.ly/2YkWbKa.