On April 30, 2020, the Board of Governors of the Federal Reserve System (the Federal Reserve) announced changes to its Main Street Lending Program (MSLP) in response to feedback from the public with respect to its initial term sheets published on April 9, 2020. We described the terms of the prior iteration of the MSLP in a previous GT Alert. The MSLP is intended to provide credit support to small- and medium-sized businesses during the current economic crisis caused by the COVID-19 pandemic. The Federal Reserve Bank of Boston will implement the program by creating a special purpose vehicle (SPV) to purchase up to $600 billion of participations in eligible loans made to eligible borrowers originated by eligible lenders. The U.S. Department of the Treasury will provide $75 billion for the program using funds authorized to Treasury by Title IV of the CARES Act. View MSLP Frequently Asked Questions, released April 30. The Federal Reserve stated that a start date for the MSLP will be announced “soon.”

Public comments received by the Federal Reserve indicated that the program should be broader and accessible to more businesses. In response, on April 30 the Federal Reserve announced several changes to the program that include lowering the minimum loan size to $500,000, expanding borrower eligibility, creating a third loan facility option, “Priority Loans,” in addition to making refinements to the New Loan Facility and the Expanded Loan Facility, and allowing for the use of adjusted EBITDA in connection with determining the leverage ratio for purposes of calculating the maximum loan amount.

Continue reading the full GT Alert, which contains a useful chart summarizing the terms of the three loan facilities.