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The New Main Street Lending Program: A Guide to The Fed's Changes and Additions to the Facilities and Comparison of the Program Terms

Client Updates

On Thursday, April 30, 2020, the Board of Governors of the Federal Reserve System (“Fed”) announced it is changing the scope and eligibility for its Main Street Lending Program (“MSLP”). The MSLP was created to help credit flow to small and medium-sized businesses (“SMEs”) that were in sound financial condition before the COVID-19 pandemic but that are at risk of being impaired or destroyed in the wake of the crisis, leading to longer-term economic damage in the U.S. Following extensive public comments, the Fed has adopted important changes to the MSLP that will provide greater access for borrowers and lenders, including expanding the types of borrowers who can receive loans, adding a new facility for additional borrowers and broadening the types of lenders who can participate in the MSLP.

 The MSLP was initially announced on March 23, 2020 by the Fed as part of a suite of measures to address the economic disruption caused by the COVID-19 pandemic. Those measures included several programs designed to support the debt markets and general corporate lending. See our alert on the Fed’s initial announcement and programs, including the MSLP, here. The MSLP, through which the Fed will support the purchase of up to $600 billion in bank loans made to SMEs, was initially comprised of two loan facilities, the Main Street New Loan Facility (the “MSNLF”) for new term loans, and the Main Street Expanded Loan Facility (“MSELF”) for increases to existing term loans.

In a later announcement regarding the MSLP on April 9, 2020, the Fed defined its MSLP lending facilities. See our alert summarizing the April 9, 2020 announcement and the MSLP generally here.

The Fed solicited comments from the public on the terms of the MSLP and the term sheets for each of the MSNLF and MSELF. More than 2000 individuals, enterprises, and advocacy organizations submitted public comments to the Fed, which clearly drove many of the changes announced on April 30. The April 30, 2020 announcement further defines the program. With these changes, the Fed stated that it believes the program will now offer more options to a wider set of eligible SMEs.

This alert provides a summary of the Fed’s changes to the MSLP programs generally, including updates to the MSNLF and MSELF and the addition of a new facility, the Main Street Priority Loan Facility (“MSPLF”).

To read the full update, click here.

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