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Main Street Lending Program

IS THE MSLP PROGRAM RIGHT FOR YOUR BUSINESS?

Small and medium-sized businesses are integral to the U.S. economy and create jobs for a large share of the U.S. workforce.

The Federal Reserve’s Main Street Lending Program (MSLP) is designed to provide support to small and medium-sized businesses and their employees during the current period of financial strain by supporting the provision of credit to eligible businesses.

The availability of additional credit is intended to help companies that were in sound financial condition prior to the onset of the COVID-19 pandemic maintain operations and payroll until conditions normalize.

As MSLP moves towards an anticipated early June commencement date, it’s vital to understand program eligibility, loan options including maximum borrowing amounts, and underwriting requirements.

MSLP assistance

Aprio’s advisors are monitoring all new information from the Federal Reserve and are providing up-to-date guidance to clients regarding additional provisions and considerations related to the Main Street Lending Program.

Aprio’s Main Street Lending team can assist Eligible Borrowers and Eligible Lenders with:

  • Eligibility criteria
  • Calculation of 2019 Adjusted EBITDA (and Adjusted EBITDA through current interim period in 2020)
  • Financial modeling and projections for 2020, 2021, 2022, 2023 & 2024
  • Assessment of alternative capital options versus MSLP
  • Evaluation of MSLP loan covenants
  • Evaluation of the impact of MSLP borrowings on existing loan covenants
  • Tax analysis and consulting

MSLP program overview

The Main Street Lending Program is intended to provide loan facilities to businesses with fewer than 15,000 employees or 2019 annual revenues of $5 billion or less. Each of the three loan types boast a different maximum loan size, but all three provide a four-year, low-cost lifeline with deferred principal and interest payments for the first year.

For Profits
Main Street Lending Program Loan Options New Loans Priority Loans Expanded Loans
Term 5 years
(previously 4 years)
Minimum Loan Size $250,000
(previously $500,000)
$10M
Maximum Loan Size The lesser of $35M, or an amount that, when added to outstanding and undrawn available debt, does not exceed 4.0x adjusted EBITDA
(previously $25M)
The lesser of $50M, or an amount that, when added to outstanding or undrawn available debt, does not exceed 6.0x adjusted EBITDA
(previously $25M)
The lesser of $300M, or an amount that, when added to outstanding or undrawn available debt, does not exceed 6.0x adjusted EBITDA
(previously $200M)
Risk Retention 5%  5%
(previously 15%)
5%
Principal Repayment Principal deferred for two years, years 3-5:
15%, 15%, 70%(previously principal deferred for one year and 33.33% repayment due in years 2-4)
Principal deferred for two years, years 3-5:
15%, 15%, 70%(previously principal deferred for one year and 15%, 15%, 70% repayment due in years 2, 3, and 4, respectively)
Interest Payments Deferred for one year
Rate LIBOR + 3%

Note – Information hereon is based on draft term sheets issued by Federal Reserve on June 8, 2020.  Aprio will continue to monitor announcements from Federal Reserve and will update terms as amendments and changes are announced.

For Nonprofits
Proposed Main Street Lending Program Nonprofit Loan Options Nonprofit New Loans Nonprofit Expanded Loans
Term 5 year
Minimum Loan Size $250,000 $10M
Endowment Cap $3 billion
Years in Operation At least 5 years
Employee Min/Max Employees fewer than 15,000 and greater than 50
Revenue cap and source requirement 2019 Revenues less than $5 billion, with less than 30% sourced from donations
Maximum Loan Size The lesser of $35M, or the borrower’s average 2019 quarterly revenue The lesser of $300M, or the borrower’s average 2019 quarterly revenue
Risk Retention 5%
Principal Repayment Principal deferred for two years; years 3-5: 15%, 15%, 70%
Interest Payments Deferred for one year
Rate LIBOR + 3%

Note – Information hereon is based on draft term sheets issued by Federal Reserve on June 15, 2020.  Aprio will continue to monitor announcements from Federal Reserve and will update terms as amendments and changes are announced.

Main Street Lending Resources from the Federal Reserve

TERM SHEET dated June 8, 2020 – Main Street New Loan Facility (MSNLF)

TERM SHEET dated June 8, 2020 – Main Street Priority Loan Facility (MSPLF)

TERM SHEET dated June 8, 2020 – Main Street Expanded Loan Facility (MSELF)

TERM SHEET dated June 15, 2020 – Nonprofit Organization Expanded Loan Facility

TERM SHEET dated June 15, 2020 – Nonprofit Organization New Loan Facility

FAQ dated June 26, 2020 – Main Street Lending Program Frequently Asked Questions (FAQs)

Federal Reserve Webinar Presentation dated May 29, 2020 – Main Street Lending Program Webinar for Borrowers Presentation

Federal Reserve Webinar Presentation dated June 3, 2020 – Borrower Drop in Session

Wondering if the MSLP is right for your business? Complete the form and start a conversation with Michael Levy, Partner-in-Charge, Private Equity and Transaction Advisory Services.

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