Federal Reserve Opens Lender Registration for Main Street Lending Program and Announces Main Street Loan Options for Nonprofit OrganizationsJune 17, 2020
On June 15, 2020, the Federal Reserve announced that lender registration for the Main Street Lending Program is now open. Lender registration instructions, as well as the form documentation relating to this program, are available here. The Federal Reserve has encouraged lenders to begin making Main Street loans immediately after they have registered for the program, and noted that it expects to begin buying loans shortly after the opening of lender registration. A business interested in the Main Street Lending Program must submit an application directly to an eligible lender. Our prior alert discussing the Main Street Lending Program is available here.
Also on June 15, the Federal Reserve announced two additional Main Street facilities to support lending to nonprofit organizations that were in sound financial condition prior to the COVID-19 pandemic: the Nonprofit Organization New Loan Facility (the “NONLF”) and the Nonprofit Organization Expanded Loan Facility (the “NOELF”). Recognizing the varying circumstances, structure and needs of nonprofit organizations, the Federal Reserve and the Treasury Department have requested comments on the proposed terms of these two facilities through June 22, 2020.
Under the Main Street Lending Program, which was established under Section 13(3) of the Federal Reserve Act, the Federal Reserve Bank of Boston will lend money on a recourse basis to a special purpose vehicle (the “SPV”). This SPV will then purchase up to $600 billion in loans from five facilities: the Main Street New Loan Facility (the “MSNLF”), the Main Street Priority Loan Facility (the “MSPLF”), the Main Street Expanded Loan Facility (the “MSELF”), the NONLF and the NOELF. The Treasury Department will invest $75 billion in the SPV from funds appropriated under Title IV of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).
Under the MSNLF and the MSPLF, eligible lenders may originate new term loans to eligible for-profit borrowers, while eligible lenders may upsize term loans or revolving credit facilities entered into on or before April 24, 2020 under the MSELF. Under the NONLF, eligible lenders may originate new term loans to eligible nonprofit borrowers, while eligible lenders may upsize term loans or revolving credit facilities entered into on or before June 15, 2020 under the NOELF.
The latest term sheet for the MSNLF is available here, the latest term sheet for the MSPLF is available here, and the latest term sheet for the MSELF is available here. The draft term sheets for the NONLF and the NOELF are available here and here. These terms are subject to change.
Updates to the Main Street Lending Program will be posted on the Federal Reserve’s website, and additional resources relating to the program are available on the Federal Reserve Bank of Boston’s website.
We are here to help answer specific questions and offer advice on your options. Please contact any member of our Corporate & Business Group to discuss.