The CARES Act’s ‘Main Street Lending Program’ to Provide $600 Billion in Loans to Small and Medium-Sized Businesses

The Federal Reserve established the Main Street Lending Program (MSLP) as part of the CARES (Coronavirus Aid, Relief & Economic Security) Act to help credit flow to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 crisis, but now need loans to help maintain their operations until they have recovered from, or adapted to, the impacts of the pandemic. The program will make available a total of $600 billion in financing for eligible businesses. (Note: Main Street loans are not grants and cannot be forgiven. )

While the program’s start date has yet to be announced, here’s what you need to know to check eligibility and get ready to apply, according to the U.S. Chamber of Commerce’s Guide to the Main Street Lending Program:

Am I eligible?
In order to be eligible for a MSLP loan, a business must:

  • Have been established before March 13, 2020
  • Not be an ineligible business according to Small Business Administration (SBA) regulations
  • Have no more than 15,000 employees or 2019 annual revenues of no more than $5 billion
    • The SBA’s affiliation rules apply in determining the employee and revenue count.
    • In counting employees, the MSLP advises businesses to refer to SBA regulations by counting all full-time, part-time, seasonal, or otherwise employed persons, excluding volunteers and independent contractors.
  • Have been created or organized in the U.S. with significant operations in and a majority of its employees based in the U.S.
  • Not also participate in one of the other Main Street loan facilities, as well as the Primary Market Corporate Credit Facility
    • Note: Businesses that received support through the SBA Paycheck Protection Program (PPP) are eligible to receive a Main Street loan.
  • Not have received specific support pursuant to the CARES Act (Subtitle A of Title IV for air carriers, air cargo, and businesses critical to national security)

All of the above criteria must be met in order to be eligible.

 How do I apply?
Eligible borrowers must submit an application and other documentation required by an eligible lender. Borrowers should contact lenders for more information on whether the lender plans to participate in the program and for more information on the application process. Additional information about the application process will be announced in the future.

Eligible lenders are U.S. federally-insured depository institutions (including banks, savings associations, and credit unions) as well as any U.S. branch or affiliate of a foreign bank.

How much can I borrow?
The MSLP offers three different secured or unsecured 5-year term loan options set at an adjustable rate of LIBOR (1 or 3 month) plus 300 basis points with principal deferred for two years and interest payments deferred for one year for eligible borrowers. Unlike Paycheck Protection Program (PPP) loans, Main Street loans are full-recourse loans and are not forgivable. All loans under the MSLP must permit prepayment without penalty. All loans are made by private financial institutions but backed by the Federal Reserve.

For additional details about loan options and borrower criteria, view the full Guide to the Main Street Lending Program at https://www.uschamber.com/report/guide-the-main-street-lending-program.