On June 8, 2020, the Federal Reserve (or “Fed”) published updated FAQs (the “FAQ”) and updated term sheets for the Main Street Lending Program (“MSLP”). The new FAQ, which may be further revised, updates prior FAQs that were published on April 30, 2020 and revised on May 27, 2020. The most recent revisions increase the appeal of the program for US businesses in a number of ways, including by (1) lowering the minimum loan size for “New Loans” and “Priority Loans” to $250,000, (2) increasing the maximum loan size for all Main Street Loans, (3) lengthening the term of the loans from 4 years to 5 years, and providing an additional year of payment deferment, (4) increasing the FRB Boston participation rate in “Priority Loans” to 95% (from 85%), and (5) reducing the amortization schedule for “New Loans”.
The attached client alert summarizes key updates provided by the Fed over the past two weeks and summarizes the program forms provided by FRB Boston. It also calls attention to aspects of the MSLP that potential borrowers and lenders should consider when participating in the MSLP, and highlights some ambiguities that might affect their analysis of the program and its terms. In addition, it contains a chart at the end that summarizes the differences and similarities between the three categories of loans under the MSLP.