This series has already noted a number of resources available to support Florida’s businesses during the ongoing Coronavirus/COVID-19 pandemic. 1 One which has not yet been discussed to-date is the Federal Reserve’s Main Street Lending Program.
As excerpted from ‘The Fed’s’ detailed explanation of the Main Street Lending Program 2 :
…As part of its broad effort to support the economy, the Federal Reserve developed the Main Street Lending Program to help credit flow to small and medium-sized businesses that were in sound financial condition before the pandemic.
…Under the new loan option, lenders would retain a 15 percent share on loans that when added to existing debt do not exceed six times a borrower’s income, adjusted for interest payments, taxes, and depreciation and other appropriate adjustments. This compares to the existing loan options where lenders retain a 5 percent share on loans, but have different features. Under all of the loan options, lenders will be able to apply their industry-specific expertise and underwriting standards to best measure a borrower’s income. In total, three loan options—termed new, priority, and expanded—will be available for businesses. The chart below summarizes the different loan options.
Additionally, businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, compared to the initial program terms, which were for companies with up to 10,000 employees and $2.5 billion in revenue. The minimum loan size for two of the options was also lowered to $500,000 from $1 million. With the changes, the program will now offer more options to a wider set of eligible small and medium-size businesses.
The Board recognizes the critical role that nonprofit organizations play throughout the economy and is evaluating a separate approach to meet their unique needs.
… The Treasury will provide $75 billion for the program using funds from the Coronavirus Aid, Relief, and Economic Security Act. Frequently asked questions and answers for lenders and borrowers are also available. A start date for the program will be announced soon.
| Main Street Lending Program Loan Options | New Loans | Priority Loans | Expanded Loans |
| Term | 4 years | 4 years | 4 years |
| Minimum Loan Size | $500,000 | $500,000 | $10,000,000 |
| Maximum Loan Size Recent Developments | The lesser of $25M or an amount that, when added to outstanding and undrawn available debt, does not exceed 4.0x adjusted 2019 EBITDA | The lesser of $25M or an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA | The lesser of $200M, 35% of existing outstanding and undrawn available debt, or an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA |
| Risk Retention | 5% | 15% | 5% |
| Payment (year one deferred for all) | Years 2-4: 33.33% each year | Years 2-4: 15%, 15%, 70% | Years 2-4: 15%, 15%, 70% |
| Rate | LIBOR + 3% | LIBOR + 3% | LIBOR + 3% |
As noted in previous articles, and particularly since the start date for the Main Street Lending Program has not yet commenced, it is imperative for Florida businesses to contact their banks as soon as possible to obtain further information about or to apply for one of these loans. Additionally, it is also important to compile a company’s financial documents and data; simply put, the better prepared a borrower is in advance, as a general matter the easier the application process can proceed.
For information about Bogin, Munns & Munns’ own response to Coronavirus readiness
Note: Citations are given to the sources to respect the original authors’ copyrights.
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1 See Florida Prepares To Re-Open On May 4, 2020, https://www.boginmunns.com/business-stops-in-its-tracks/, Another Timely Coronavirus/Covid-19 Update,
Additional Resources for Florida’s Businesses, A brief note for Florida’s individuals, families, and businesses about extensions, Coronavirus/COVID-19 pandemic state, The Paycheck Protection Program, Resources for Florida’s businesses, families, and individuals, Do You Count?, Life in Times of Coronavirus.
2 Source: The Main Street Lending Program
– For more information, call Philip N. Kabler of the Gainesville, FL office of Bogin, Munns & Munns at 352.332.7688, where he practices in the areas of business, banking, real estate, and equine law. He has taught business and real estate law courses at the University of Florida Warrington College of Business Administration and Levin College of Law and is the President-Elect of the Eighth Judicial Circuit Bar Association.
NOTICE: The article above is not intended to serve as legal advice, and you should not rely on it as such. It is offered only as general information. You should consult with a duly licensed attorney regarding your Florida legal matter, as every situation is unique. Please know that merely reading this article, subscribing to this blog, or otherwise contacting Bogin, Munns & Munns does not establish an attorney-client relationship with our firm. Should you seek legal representation from Bogin, Munns & Munns, any such representation must first be agreed to by the firm and confirmed in a written agreement.
