Main Street Lending Program – Major Changes and Proposed Program for Nonprofit Borrowers
On Monday, June 15, 2020, the Federal Reserve opened the Main Street Lending Program (the “MSLP”), which is designed to increase access to capital for small and medium-sized businesses.
Established by the Federal Reserve under the CARES Act in April and May, the MSLP comprises three loan facilities: the Main Street New Loan Facility (the “New Loan Facility” or “NLF”); the Main Street Expanded Loan Facility (the “Expanded Loan Facility” or “ELF”); and the Main Street Priority Loan Facility (the “Priority Loan Facility” or “PLF”). Under the MSLP, the Federal Reserve lends to a single Special Purpose Vehicle (the “SPV”) which will then use those funds to purchase participation in eligible loans from eligible lenders.
On June 8, 2020, the Federal Reserve Board modified a significant number of key terms of the MSLP in order to allow more businesses to take advantage of the program. Also on June 15, 2020, the Federal Reserve Board published draft term sheets for the expansion of the MSLP to nonprofit organizations.
While Sherin and Lodgen has previously discussed the MSLP at some length in an earlier alert, the changes published by the Federal Reserve in the last week merit a new discussion of the program in its entirety.