The Federal Reserve established the Main Street Lending Program (Program) to support lending to small and medium-sized for profit businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic. … the Nonprofit Organization Expanded Loan Facility (NOELF).
Herein, are Main Street loans secured?
Main Street loans may be secured or unsecured, but certain priority rules apply in the event the borrower has other outstanding debt: Priority Requirements for MSNLF (“New Loan Facility”) Loans – MSNLF loans may not be expressly “contractually subordinated” to the borrower’s other debt.
Beside this, can Main Street lending program be used to refinance existing debt?
Borrowers should also be aware that the Fed has provided for certain restrictions relating to the repayment and termination of any debt other than loans incurred under the Program Facilities, except for loans under the MSPLF, which, as mentioned above, are permitted to be used by the borrower to refinance existing debt …
Can you get PPP and Main Street loan?
In order to be an “eligible borrower” the individual or entity must have been established prior to March 13, 2020 as a for-profit “business” that would be eligible to borrow money under the PPP. …
The term sheet dated April 30, 2020 language suggests that the loans being refinanced must be owed to a lender that is not the eligible lender of the MSLP loan. Is a guarantor required? No, a personal guarantee is not required.
The FAQs clarify that personal guarantees are not required under the Main Street Lending Program. However, an Eligible Lender may require a guarantee as appropriate under their underwriting practices.
Two other banks – PNC Bank and U.S. Bank – are participating in the Main Street Lending Program, but only with existing customers. JPMorgan Chase Bank plans to participate and is working through the registration process, a bank spokeswoman said.
In the Main Street Program, the Fed bought 95% of the banks’ loans for a total of $16.59 billion. It was backstopped by $75 billion appropriated by Congress in the Cares Act. It closed on Jan. 8 after then-Treasury Secretary Steven Mnuchin instructed the Fed to wind it down.
The Federal Reserve established the Primary Market Corporate Credit Facility (PMCCF) on March 23, 2020, to support credit to employers through bond and loan issuances. … This facility was open to investment grade companies, as well as certain companies that were investment grade as of March 22, 2020.
The Main Street Lending Program supports lending to small and medium-sized for-profit businesses and nonprofit organizations that were in sound financial condition before the COVID-19 pandemic but lack access to credit on reasonable terms.
Table 1. Key Main Street For-Profit Facility Loan Terms (Latest Terms)
|Characteristics of Main Street For-Profit Business Loan Types|
|New Loan Facility||Expanded Loan Facility|
|Maximum Combined Debt to Adjusted 2019 EBITDA||4 times||6 times|
|Lender Participation Rate||5%|
|Fed Participation Rate||95%|
Borrowers that have already laid off or furloughed workers as a result of the disruptions from COVID-19 are eligible to apply for Main Street Loans. Borrowers must also follow compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act.
Treasury Secretary Steven Mnuchin’s decision not to extend funding for the Federal Reserve’s Main Street Lending Facility after Dec. … Mnuchin announced on Nov. 19 that he will not extend the deadline for a series of emergency Fed programs that were funded by the CARES Act, including the Main Street facility.