This loan program has been updated as of May 11, 2020. For the most updated information please read Fed Updates Main Street Loan Program.
The Federal Reserve has announced that loans for mid-size businesses affected by COVID-19 will be available through the Main Street Business Lending Program. The Program offers new and expanded loan facilities through new or expanded lending to businesses with up to 10,000 employees or $2.5 billion in 2019 revenue. Loans will be available through private lending institutions and will have four-year maturities with principal and interest payments deferred for the first year and no prepayment penalties.
While we await more guidance from the Treasury and Federal Reserve, some of the initial program provisions include:
- Loan amounts start at $1 million.
- For the Main Street New Loan Facility, loan amounts are a maximum of $25 million or an amount that, when added to the borrower’s outstanding and committed but undrawn debt, does not exceed four times 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA).
- Loan amounts are a maximum equal to the lesser of:
- $150 million or
- 30 percent of the borrowers’ outstanding and committed but undrawn bank debt, or an amount that when added to the borrower’s outstanding and committed but undrawn debt, does not exceed six times 2019 EBITDA.
This information is not finalized and is subject to change.
Current guidance suggests that eligible borrowers must follow specific guidelines, including:
- Proceeds must be used to maintain employee headcount, compensation, and benefits.
- Borrowers may not move jobs offshore or outsource any jobs for two years after repayment.
- Borrowers must remain neutral in any union effort to organize.
- Borrowers must not abrogate any existing collective borrowing agreement.
- Borrowers must follow specific compensation restrictions for specific high earners.
Other terms and conditions may apply.
Comments on the current program may be submitted until April 16, 2020, meaning that additional guidance and availability of the program is not expected until sometime after that date. HBK will provide more information and detail as they become available. If you have questions about this information, please contact your HBK Advisor.