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.
While the program’s start date has yet to be announced, here’s what you need to know to check eligibility and get ready to apply.
1. Am I eligible?
In order to be eligible for a Main Street Lending Program loan, a business must:
- Have been established before March 13, 2020
- Not be an ineligible business according to Small Business Administration (SBA) regulations
- Have no more than 15,000 employees or 2019 annual revenues of no more than $5 billion
- The SBA’s affiliation rules apply in determining the employee and revenue count
- In counting employees, the Main Street Lending Program advises businesses to refer to SBA regulations by counting all full-time, part- time, seasonal, or otherwise employed persons, excluding volunteers and independent contractors
- Have been created or organized in the U.S. with significant operations in and a majority of its employees based in the U.S.
- Not also participate in one of the other Main Street loan facilities, as well as the Primary Market Corporate Credit Facility
- Note: Businesses that received support through the SBA Paycheck Protection Program (PPP) are eligible to receive a Main Street loan
- Not have received specific support pursuant to the CARES Act (Subtitle A of Title IV for air carriers, air cargo, and businesses critical to national security)
All of the above criteria must be met in order to be eligible.
See “Additional Borrower Criteria” section for more information.
2. How do I apply?
Eligible borrowers must submit an application and other documentation required by an eligible lender. Borrowers should contact lenders for more information on whether the lender plans to participate in the program and for more information on the application process. Additional information about the application process will be announced in the future.
Eligible lenders are U.S. federally-insured depository institutions (including banks, savings associations, and credit unions) as well as any U.S. branch or affiliate of a foreign bank. Nonbank financial institutions are not considered eligible lenders at this time, although the Federal Reserve is considering options to expand this list in the future.
3. How much can I borrow under this program?
The Main Street Lending Program offers three different secured or unsecured 4-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 permit…
Read More: Guide to the Main Street Lending Program