Main Street Expanded Loan Facility: Facilitating Lending To Small And Medium-Sized Businesses.pdf

This program, authorized under section 13(3) of the Federal Reserve Act, aims to facilitate lending to small and medium-sized businesses during the COVID-19 pandemic. Key aspects include:

Participants:

Federal Reserve Bank of Boston (Reserve Bank): Provides funding through a common special purpose vehicle (SPV).
Eligible Lenders: U.S. federally insured depository institutions, foreign bank branches/agencies, and related holding companies.
Eligible Borrowers: Businesses established before March 13, 2020, not receiving specific CARES Act support, with certain size and operational criteria met.

Loan Details:

Facility Size: Up to $600 billion combined for the Main Street Expanded Loan Facility (MSEF), Main Street Priority Loan Facility (MSPLF), and Main Street New Loan Facility (MSNLF).
Loan Type: Secured or unsecured term loans or revolving credit facilities with specific terms:
5-year maturity
Two years deferred principal payments, one year deferred interest (capitalized)
Adjustable rate of LIBOR + 300 basis points
Principal amortization: 15% at end of years 3 & 4, 70% balloon payment at maturity (end of year 5)
Minimum loan size: $10 million
Maximum loan size: Six times adjusted 2019 EBITDA (defined based on prior methodology)
Priority: Upsized tranche is senior or pari passu with other eligible borrower debt.

SPV Involvement:

The SPV purchases a 95% participation in the upsized tranche of each Eligible Loan from Eligible Lenders.
Eligible Lenders retain a 5% interest in the upsized tranche until repayment or sale of the SPV's participation.
$75 billion equity investment by the U.S. Treasury in the single common SPV.

Certifications and Covenants:

Eligible Lenders must agree:

Not to request early debt repayment or interest payments from Eligible Borrowers until the upsized loan is repaid.
Not to cancel or reduce existing committed lines of credit to Eligible Borrowers, except in case of default.
To maintain internal risk ratings equivalent to a "pass" as of December 31, 2019 for eligible loans.