Comparing the Main Street New Loan Facility (MSNLF), Main Street Expanded Loan Facility (MSELF) and Main Street Priority Loan Facility (MSPLF): Key Differences and Takeaways
April 15, 2020
Updated 5/4/2020 at 2:30pm ET — Added details on the third facility, the Main Street Priority Loan Facility (MSPLF).
SC&H’s Key Takeaways
- There are now three types of facilities available under the Main Street Lending Program (MSLP), the Main Street New Loan Facility (MSNLF), Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF).
- Both of the loans under the MSLP are designed for small and medium size businesses, defined as under 15,000 employees (previously 10,000 employees) or under $5 billion (previously $2.5B) in 2019 revenues.
- MSNLF allows for new loans originating on or after April 8, 2020 while the MSELF allows borrowers to expand financing for loans originating prior to April 8, 2020.
- Borrowers who apply for and receive loans under the Paycheck Protection Program (PPP) may also take out MSLP loans.
- However, borrowers are limited to utilizing only one of the following facilities and cannot have received specific support pursuant to the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of the Tile IV of the CARES Act):
- Main Street New Loan Facility (MSNLF)
- Main Street Priority Loan Facility (MSPLF)
- Main Street Expanded Loan Facility (MSELF)
- Primary Market Corporate Credit Facility (PMCCF)
- The minimum loan amount is $500,000 under both MSNLF and MSPLF (previously $1,000,000), whereas the minimum under the MSELF is $10 million (previously $1,000,000); however, the maximum loan amount varies from $25 million through MSNLF and MSPLF and $200 million through MSELF. Conditions apply for determining the maximum loan amount.
- Payments across the programs are deferred for one year, with payments for the MSNLF being evenly distributed at 33% each year and the MSPLF and MSELF having two years of 15% payments and a balloon payment of 70% in the fourth year.
The Federal Reserve issued finalized term sheets for two new lending facilities, Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF) under the CARES Act on April 9, 2020. Both facilities are intended to facilitate lending to small and medium-sized businesses with less than 10,000 employees or $2.5 billion in 2019 revenues. However, organizations may want to consider the various options that are available before making any decisions.
At this point, the terms of the MSLP appear to be final, with the Federal Reserve now working to establish the infrastructure to deliver the loans. The following table provides a comparison between the three facilities based on the latest term sheets published by the Federal Reserve on April 30, 2020.
Both the MSNLF and the MSELF are currently open for comments with the Federal Reserve through April 16, 2020. We will be monitoring these programs for changes and updates to provide continued up-to-date information and analysis. If you have any questions in the meantime, please reach out to our team here.