The Federal Reserve Board ("FRB") revised the terms of its Main Street Lending Program ("MSLP") to expand access to MSLP loans for smaller businesses. Specifically, the FRB helped smaller businesses gain access to MSLP loans by (i) reducing the minimum loan size for three Main Street facilities available to both for-profit and non-profit borrowers and (ii) excluding Paycheck Protection Program ("PPP") loans totaling less than $2 million when determining the maximum loan size.
The FRB reduced the minimum loan size of the Main Street New Loan Facility, Main Street Priority Loan Facility and Nonprofit Organization New Loan Facility from $250,000 to $100,000. For the three facilities, the FRB also adjusted the associated transaction, loan origination, and loan servicing fees for businesses that apply for loans of less than $250,000.
Additionally, the FRB clarified in a new FAQ that, when computing "existing outstanding and undrawn available debt" to determine the maximum allowable loan amount under the MSLP, PPP loans with original principal amounts totaling less than $2 million may be excluded.
The FRB explained that the MSLP is meant to support businesses that were in "sound financial condition" before the pandemic, but that are unable to access credit "on reasonable terms." The Treasury - using funds appropriated under Section 4027 ("Direct Appropriation") of the CARES Act - has committed to making a $75 billion equity investment in the program.
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