Main Street Lending Program

Federally-sponsored relief programs responding to COVID-19 provide businesses a path toward recovery, but managing loan applications and obligations can be a complex process that diverts attention from your business operations.

By reviewing your organization’s current debt capital and financial position, our professionals can help determine if the Main Street Lending Program (MSLP)—or other alternative financing options—are right for you, and support you in managing your debt capital effectively. 

Program Highlights and Eligibility

Enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the US Department of the Treasury’s MSLP facilitates lending to small- and medium-sized businesses, with the majority of eligible loans underwritten by the Federal Reserve Bank.

Borrowers can receive a minimum of $250,000 or up to $300 million depending on loan type.

Businesses with up to 15,000 employees or $5 billion in 2019 annual revenue are eligible to borrow through the program, which offers new loans, priority loans, and expanded loans. Below are the summary terms included with each loan program.

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Program Benefits

The MSLP provides key advantages to borrowers including:

  • 2+ year deferral of principal payments and 1-year deferral of interest payments
  • 5-year term with a balloon payment of the principal due on maturity
  • Approximate 3% interest rate
  • Loans are 95% backed by the Federal Reserve, enhancing interest in participating in the program.

Businesses could be eligible to borrow up to six times their earnings before interest, taxes, depreciation, and amortization (EBITDA) and can refinance their existing debt into one MSLP loan under the priority loan program.

Restrictions

It’s important to note restrictions are placed on shareholder distributions above and beyond regular tax distributions and on compensation increases for senior executives paid more than $425,000.

Banks will use the same underwriting standards used for other loan programs. While 2019 EBITDA is the program’s benchmark, banks will use 2020 EBITDA, in addition to other financial data points, as part of their underwriting criteria.

Navigate Your Options and Obligations

Loan financing is both a strategic and tactical decision, with many factors and commitments to be considered given your business’ goals, financial position, growth opportunities, and preparedness for financing discussions.

As your business works to procure loans or manage its debt, our professionals can provide:

  • Updated information regarding federally-backed loan programs and other available alternative financing options
  • Debt capital management, including evaluations of your company’s existing debt capital structure, modeling, and available options
  • Access to the debt and equity capital markets, including assistance preparing information for lenders, contacting and negotiating with prospective lenders and mezzanine and equity investors, and assistance with the financing procurement process
  • Business advice relating to cash flow management or restructuring, including ways to preserve cash and build future value

Insights


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The $600 billion Main Street Lending Program intends to replace the PPP and facilitate lending to small- and medium-sized businesses. Learn about eligibility.

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