Main Street Lending Program

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​Rödl & Partner Tax Matters Vol 2020 – 8, published May 12, 2020

 

The Paycheck Protection Program has received a lot of attention, particularly given that part of the loan may be forgiven. Another loan program that is part of the recently enacted Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) may, however, also be of benefit. The “Main Street Lending Program” is intended to provide additional financing for small- and medium-sized businesses impacted by the ongoing COVID-19 pandemic.

 

While the Main Street Lending Program does not contain a forgiveness provision, eligible borrowers can take low interest loans in minimum amounts of $500,000 with maximum amounts determined by formulas involving multiples of EBITDA and taking into account existing amounts of indebtedness. Eligible Borrowers should undertake good-faith efforts to maintain payroll and retain employees, but do not have to make attestations as to financial need as a result of COVID-19.

The Federal Reserve published updated and revised term sheets for three programs on April 30, 2020. You can read more about the programs here: Main Street New Loan Facility, Main Street Expanded Loan Facility and Main Street Priority Loan Facility. Frequently asked questions can be found here: FAQ.

Companies wishing to apply for a Main Street Lending Program loan must submit an application through an eligible lender. As of May 11, 2020, the program has not officially launched, but the Federal Reserve will be providing updates regarding the program including its launch date on its Main Street Page.

If you have any questions, please contact your local Rödl & Partner representative.

 

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