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Main Street Loan Programs Are Evolving

The government’s response to the Covid-19 impacts on our economy is constantly evolving. We have seen changes to the Payroll Protection Program, and expect additional clarifications. We are now seeing some changes to the Main Street Loan Program.


There are three different programs available to borrowers under the Main Street Loan Program:


  1. Main Street New Loan Facility (“MSNLF”)

  2. Main Street Priority Loan Facility (“MSPLF”)

  3. Main Street Expanded Loan Facility (“MSELF”)


The funds approved for the Main Street New Loan Facility, the Main Street Priority Loan Facility and the Main Street Loan Program Expanded Facility are up to $600 billion.


The Federal Reserve Bank of Boston has created a special purpose vehicle (“SPV”) to purchase participations in loans originated under this program by eligible lenders.


On June 8, 2020 the Federal Reserve Board changed some key components of the Main Street Loan Program. The changes are summarized as:


-The minimum loan size for the MSNLF and MSPLF has been reduced from $500,000 to $250,000.


-The maximum loan sizes have been increased:

  • MSNLF: Increased from $25 million to $35 million. EBITDA multiple test remains 4 times adjusted EBITDA.

  • MSPLF: Increased from $25 million to $50 million. EBITDA multiple test remains 6 times adjusted EBITDA.

  • MSELF: Increased from $200 million to $300 million. EBITDA multiple test remains at 6 times adjusted EBITDA.

-The SPV will purchase 95% of a loan under each of the programs. The MSPLF had been 85%. The MSPLF is the program that allows repayment of existing debt.


-The term of the loan has been increased from 4 years to 5 years.


-Principal repayment deferral has been increased from 1 year to 2 years.


-Payment requirements are:

  • MSNLF repayments are changed from 1/3, 1/3, 1/3 in years 2 through 4 to:

  1. Year 3: 15%

  2. Year 4: 15%

  3. Year 5: 70%

  • MSPFL repayments are extended out to the 5 year approach:

  1. Year 3: 15%

  2. Year 4: 15%

  3. Year 5: 70%

  • MSELF repayments are extended out to the 5 year approach:

  1. Year 3: 15%

  2. Year 4: 15%

  3. Year 5: 70%


The Main Street Loan Program will accept loans originated under the previous terms if the loans are funded before June 10, 2020.


The table below is from the Federal Reserve Board website and provides a quick overview of the programs.

The repayment structures of these loans require the ability of the borrower to generate sufficient cash to make the payments or generate sufficient EBITDA to restructure the debt before the first required principal payment at the end of year 3.


This program continues to provide an option to certain borrowers and should be evaluated for each potential borrower based on:

  • The borrower’s EBITDA performance in 2019.

  • The borrower’s current level of debt.

  • The borrower’s future cash flow and EBITDA forecasts.

  • The lender’s desire to participate in the Main Street Program.

Please contact us to discuss any questions or to evaluate options.

©2020 by Focus Management Group