Today, the Treasury and Federal Reserve Board announced the establishment of the Main Street Business Lending Program. According to the Treasury Secretary, the program is aimed at making a “significant difference” for medium-sized businesses.
Under the program, the Fed will facilitate lending to businesses with less than 10,000 workers or $2.5 billion in revenue. Borrowers are required to attest that the financing is required due to exigent circumstances presented by the COVID-19 pandemic and that reasonable efforts will be made to maintain payroll and retain employees. Eligible loans cannot be used to refinance pre‑existing loans.
Eligible loans will have a 4‑year maturity and a minimum size of $1 million. Loans will have an adjustable rate of the Secure Overnight Financing Rate, plus 250 to 400 basis points. Principal and interest is deferred for 1 year. Lenders will retain a 5 percent share and sell the remainder to the Fed’s Main Street facility. Up to $600 billion of loans will be purchased. Term sheets can be found here.
For legal advice specific to the operation of your Minnesota business, please contact us at Dunlap Seeger.