Main Street Lending Program Goes Live: Eligible Borrowers Can Apply Now, Relief for Non-Profits Is in Sight

Legal Alert

The Federal Reserve Bank of Boston (“FRBB”) announced that the Main Street Lending Program (the “Program”) established by the Federal Reserve Board (the “Fed”) is operational as of July 6, 2020. To obtain a Program loan, businesses must work directly with lenders registered to participate in the Program. FRBB released a state-by-state list of participating lenders, but interested businesses should also contact their lender, as the list only reflects those lenders who have elected to be listed.

The Program was established by the Fed to support lending to small- and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic. Under the Program, FRBB will loan funds to a special purpose vehicle, MS Facilities LLC (the “SPV”). The SPV will purchase up to $600 billion of eligible loans made by participating lenders. Unless extended by the Fed and U.S. Treasury Department, Program operation and SPV purchases will continue until September 30, 2020. Program loans will have a five-year maturity, principal payments will be deferred for two years and interest payments (at 3% plus LIBOR) will be deferred for one year. The Fed noted in its FAQs that, consistent with the recommendations of the Alternative Reference Rates Committee (the “ARRC”),1 the loan documents should include fallback contract language to be used should LIBOR become unavailable during the term of the loan. Eligible loans made in reliance on the prior term sheets issued April 30, 2020, and funded on or before June 10, 2020, will be accepted for purchase by the SPV only during the first 14 days of the Program’s operation.

To be eligible for a Program loan, businesses must comply with Program requirements and meet participating lenders’ underwriting standards for financial condition and creditworthiness. Among other requirements, businesses must be created or organized in the United States and have either (i) 15,000 or fewer employees, or (ii) $5 billion or less in 2019 annual revenues.

Like the Paycheck Protection Program (the “PPP”) promulgated by the Coronavirus Aid, Relief, and Economic Security Act, the eligibility thresholds for employee count and 2019 revenue must be calculated by aggregating the number of employees and revenues of the applicant and entities that are affiliated with the applicant. FAQ E.1(3). Specifically, Program applicants must comply with the U.S. Small Business Administration’s affiliation rules under 13 CFR § 121.301(f) and employee calculation rules under 13 CFR § 121.106. FAQ E.3, E.5. Unlike the PPP, Program loans are not eligible for forgiveness. FAQ A.3. Eligible businesses that obtained a PPP loan or an Economic Injury Disaster Loan may also obtain a Program loan. FAQ F.2.

Program loans will be made under five facilities: (1) Main Street New Loan Facility (“MSNLF”); (2) Main Street Priority Loan Facility (“MSPLF”); (3) Main Street Expanded Loan Facility (“MSELF”); (4) Nonprofit Organization New Loan Facility (“NONLF”); and (5) Nonprofit Organization Expanded Loan Facility (“NOELF”). As of July 6, the NONLF and NOELF for nonprofit entities remain under development and are not yet operational for borrowers.

New loans can be made to eligible borrowers under the MSNLF and MSPLF, or existing loans can be upsized under the MSELF. The MSPLF is unique among the facilities in that it may be used at the origination of the MSPLF loan to refinance existing debt. Subject to the foregoing and other limited exceptions outlined in the FAQs, borrowers under all of the Program facilities must commit to not voluntarily repay or prepay any other existing debt or interest until the eligible Program loan or upsized tranche is repaid in full.

Businesses interested in the Program can determine their eligibility and required covenants by reviewing the MSNLF Borrower Certifications and Covenants, MSPLF Borrower Certification and Covenants or MSELF Borrower Certification and Covenants. The applicant entity’s Chief Executive Officer and Chief Financial Officer (or equivalent officers) must sign the facility-specific certifications and covenants, and consent to the Fed’s purchase of the applicant entity’s loan. Participating lenders will use their own form of promissory note and other loan documentation for Program loans. Form Program documents released by the Fed requiring borrower consent include an Assignment-in-Blank and Co-Lender Agreement.  

Businesses looking to determine the most favorable Program facility should work with an eligible lender or seek legal counsel. For more information regarding the Program, businesses should review the Program FAQ, Program Legal Documents, Program Background and Term Sheets, and FRBB recorded webinars.  


1The ARRC is a group of private-market participants convened by the Federal Reserve Board and the New York Fed to help ensure a successful transition from U.S. dollar LIBOR to a new reference rate. At this time, its recommended alternative is the Secured Overnight Financing Rate (SOFR).

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