As a result of the Coronavirus Aid, Relief & Economic Security (CARES) Act, the Federal Reserve has created the Main Street Lending Program to provide a total of $600 billion in financing for small and medium-sized businesses. The program is available to both for profit businesses and nonprofit organizations.
The Main Street Lending Program offers three different secured or unsecured 5-year term loan options set at an adjustable rate of LIBOR (1 or 3 month) plus 300 basis points with principal and interest payments deferred for one year for eligible borrowers. Unlike Paycheck Protection Program (PPP) loans, Main Street loans are full-recourse loans and are not forgivable.
All loans under the Main Street Lending Program must allow prepayment without penalty. All loans are made by private financial institutions but backed by the Federal Reserve.
Eligible borrowers must have less than 15,000 employees or less than $5 billion in revenue, must have significant U.S. operations, and must not be an ineligible business per SBA regulations.
Eligible borrowers that participate in any Main Street Lending Program facility should make commercially reasonable efforts to maintain payroll and retain employees during the time that the term loan is outstanding.
The Federal Reserve further clarifies that to make “commercially reasonable efforts” a borrower should undertake good-faith efforts to maintain payroll and retain employees, in light of its capacities, the economic environment, its available resources, and the business need for labor. Businesses that have already laid-off or furloughed workers as a result of COVID-19 are still eligible to apply for Main Street loans.
Contact an Nperspective CFO to see if you are eligible and how to apply.