Assisting eligible Main Street Lending Program borrowers and lenders
The COVID-19 pandemic and the associated economic crisis have left many middle-market companies with cash-flow shortages and in search of liquidity. In an effort to help mid-sized businesses access capital the Federal Reserve (Fed) announced the creation of the Main Street Lending Program (MSLP). Under the Main Street Lending Program the Fed will make up to $600 billion in loans available via the programs two facilities the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF).
Unlike the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL), the MSLP is not connected to the Small Business Administration. Instead, the program involves the Fed providing liquidity to qualified lender who in turn originate MSNLF and MSELF loans directly with mid-sized businesses.
The Main Street Lending Program Loan Facilities Overview
|
Main Street New Loan Facility |
Mainstreet Expanded Loan Facility |
|
|
Origination |
On or after April 8, 2020 |
Before April 8, 2020 |
|
Interest rate |
Adjustable rate of SOFR + 250–400 basis points |
Adjustable rate of SOFR + 250–400 basis points |
|
Term |
4 years with amortization of principal and interest deferred for one year |
4 years with amortization of principal and interest deferred for one year |
|
Security |
Unsecured |
Pari passu basis with original loan. |
|
Minimum loan size |
$1 million |
$1 million |
|
Maximum loan size |
The lesser of $25 million or 4x 2019 EBITDA and subject to amount of current credit facilities |
The lesser of $150 million or 6x 2019 EBITDA |
|
Prepayment |
Permitted without penalty |
Permitted without penalty |
|
Loan facility fees |
“Facility Fee” from lender to SPV of 100 basis points of principal amount purchased by SPV. Lender may require borrower to pay this fee. “Loan Origination and Servicing Fee” from borrower to lender of 100 basis points of the principal amount of the loan. SPV will pay lender 25 basis points of its participation per annum for loan servicing. |
Borrower will pay lender a fee of 100 basis points of the principal amount of the upsized tranche at time of upsizing. SPV will pay lender 25 basis points of its participation in the upsized tranche per annum for loan servicing. |
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Eligible Borrower Services:
Aprio’s Main Street Lending team can assist eligible borrowers with the following:
- Calculation of 2019 EBITDA used to determine maximum loan size
- Financial projections for 2020, 2021, 2023 & 2024
- Financial modeling
- Assessment of alternative capital options versus MSLP
- Evaluation of MSLP loan covenants
- Evaluation of the impact of MSLP borrowings on existing loan covenants
- Tax analysis and consulting
Eligible Lender Services:
Additionally, Aprio’s Main Street Lending team can also assist eigible lenders with the following:
- Calculation of 2019 EBITDA used to determine maximum loan size
- Financial projections for 2020, 2021, 2023 & 2024
- Financial modeling