The Federal Reserve today released details on the Main Street New Loan Facility (“MSNLF”) and Main Street Expanded Loan Facility (“MSELF”) programs funded with up to $600 billion as part of the CARES Act.
MSNLF and MSELF are loans to be repaid, unlike the Paycheck Protection Program with its loan forgiveness feature. These facilities are, however, offered with attractive terms. The MSNLF is, as its name implies, a new loan; the MSELF loans are upsized tranches of existing loans, but the upsized tranche will have the features noted in the table below.
The features of the MSNLF and MSELF are summarized in the following table:
| MSNLF | MSELF | |
| Eligible Borrowers | Businesses up to 10,000 employees or up to $2.5 billion in 2019 annual revenue. Business must be one created or organized in the US or under the laws of the US with “significant operations in and a majority of its employees based in the US. | Businesses up to 10,000 employees or up to $2.5 billion in 2019 annual revenue. Business must be one created or organized in the US or under the laws of the US with “significant operations in and a majority of its employees based in the US. Cannot participate in the MSNLF. Borrower must have an existing term loan made by an Eligible Lender originated before April 8, 2020. |
| Maximum Loan Size | Lesser of (i) $25 million or (ii) an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed four times the borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (“EBITDA”) | Lesser of (i) $150 million (ii) 30% of the borrower’s existing outstanding and committed but undrawn bank debt, or (iii) an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed six times the borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (“EBITDA”) |
| Minimum Loan Size | $1 million | $1 million |
| Term | 4 year maturity | 4 year maturity |
| Principal and Interest Deferral | Amortization of Principal and Interest deferred for one year | Amortization of Principal and Interest deferred for one year |
| Interest Rate | SOFR + 250-400 basis points | SOFR + 250-400 basis points |
| Fees | Origination fee of 100 basis points of the principal amount of loan | Origination fee of 100 basis points of the principal amount of upsized tranche of the loan |
| Prepayment | Prepayment permitted without penalty | Prepayment permitted without penalty |
| Required Borrower Attestations |
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| Expiration |
September 30, 2020 | September 30, 2020 |
The Federal Reserve is taking a more measured approach to the roll-out of MSNLF and MSELF programs, and thus these programs are proceeding at a slower rate than we experienced with the PPP program. Hopefully this means there will be more fulsome guidance and clarity when lenders begin working with the program.
As this information was just released the morning of April 9, Hawley Troxell will continue to update this resource as details emerge.
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