As some of us are waiting to see if additional funding will be made to the Paycheck Protection Program (“PPP”), businesses should seek for additional sources of financing to survive through the economic crisis resulting from the COVID-19 Pandemic.  On April 9, 2020, the Federal Reserves has unveiled details of a new program to loan money to small to midsize businesses – the Main Street Lending Program.

Unlike PPP loans, which may be forgiven if the borrowers meet certain requirements, this program is a traditional government backed loan with a low interest rate.  Businesses that have taken advantage of the PPP may also take out the Main Street loans.  Here are some key terms and eligibility of the program:

• The program is available to any businesses with fewer than 10,000 employees or with revenue of less than $2.5 billion.
• To be eligible, businesses need to have at least $250,000 in EBITDA with no debt, or a higher EBITDA threshold will apply to businesses with debt.
• The borrower must maintain payroll and retain workers through the pandemic.
• The borrower must meet all compensation, stock repurchase and dividend restrictions.
• The loan amount is between $1 million to $10 million.
• The repayment term for this program is four years with a variable interest rates, arranging from 2.5% to 4%.
• Amortization of principal and interest deferred for one year.
• Prepayment permitted without penalty.

If you are interested in participating in this program, contact your local lender.  Eligible lenders include U.S.-insured depository intuitions, U.S. bank holding companies and U.S. savings and loan holding companies.

Additional detail about the program can be found in the link below: https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm