Main Street Business Lending Program

Dunlap Law Insights

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.