On April 9, the Federal Reserve announced that it is establishing a Main Street Lending Program to facilitate lending to small and medium-sized businesses that were in good financial standing before the Coronavirus pandemic. More information on the program can be found here:
https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm
Highlights of the Main Street Lending Program:
- Businesses with up to 10,000 employees or up to $2.5 billion in revenue in 2019;
- Loans will range from a minimum of $1 million up to a maximum of the lesser of:
- $25 million or;
- 4x EBITDA;
- Less existing debt and lines of credit (used and unused amounts).
- There is no calculation involved in determining the loan amount other than the maximum EBITDA calculation;
- Interest and principal amounts are deferred for one year;
- Loans will have a four year maturity. There are currently no stated repayment terms other than no prepayment penalty;
- Borrowers will have to certify:
- That the funds are necessary because of the COVID-19 pandemic and they will make reasonable effort to maintain payroll and retain employees during the term of the loan;
- That they will not use the funds to refinance existing debt;
- That they meet the EBITDA leverage condition above. There is currently no specification if the EBITDA calculation has to be certified or can be prepared form internal statements.
*The eligible loan features and required attestations are as of April 28th 2020 and are subject to change.
If you have any questions or would like more information please contact your Urish Popeck advisor.