On April 9, 2020, the board of governors of the Federal Reserve System (the “Federal Reserve”) took several steps designed to promote maximum employment and stabilize the financial system during the pendency of the COVID-19 pandemic, including the creation of the Main Street New Loan Facility (the “New Loan Facility”) and the Main Street Expanded Loan Facility (the “Expanded Loan Facility,” and collectively with the New Loan Facility, the “Main Street Lending Programs” or the “Programs”), which will provide up to $600 billion in new credit to eligible businesses that were in good standing prior to the COVID-19 crisis, including small businesses and the approximately 20,000 medium-sized U.S. businesses that employ between 500 and 10,000 workers and who were not able to access PPP funds or other initiatives limited to small businesses. The Federal Reserve expects to launch the Programs one day this week. Small businesses that have benefitted from the PPP program may also participate in the Main Street Lending Programs.
The following summarizes the latest available information as of the above date and is largely based on the Federal Reserve’s Term Sheets for the Programs (the “Term Sheets”). In the coming days, we anticipate adjustments to and guidance on the Programs by the Board of Governors of the Federal Reserve and/or the Secretary of the U.S. Department of Treasury (“Treasury”). Any changes to the Programs will be announced on the Board of Governors’ website. Accordingly, while this overview may be useful for prospective participants, it is necessarily preliminary in nature and should not be relied upon as the final statement of the terms of the Main Street Lending Programs.
The Federal Reserve has not yet provided information regarding how businesses can obtain a new loan or upsize an existing loan under the Programs, except that prospective borrowers will apply directly to eligible lending institutions (“Eligible Lenders”), and will not apply to a governmental agency.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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