Uncertainty dominates as the presence of COVID-19 continues to spike steeply in some locales across the country and yet is rapidly decreasing in others. Local governments are working to make safe and smart decisions as they move toward opening up the economy, with most expecting to lift all shelter-in-place orders by mid-June, if not earlier.

Cash is king!

Access to funding is a critical component for most of the companies that are now preparing to re-open. As such, the Federal government just announced on June 8 that some of the key characteristics of the Main Street Lending Program have been adjusted to ensure greater participation for the small to medium size companies that are the primary target. In an effort to help these most vulnerable companies across the country, the U.S. Treasury is providing $75 billion in equity that can be used for $600 billion in lending.

Unlike the Small Business Administration’s Paycheck Protection Program (PPP), the Main Street loan is not one that can be forgiven. However there are some critical changes that are especially noteworthy: 

  • The minimum amount that can be borrowed is being lowered to $250,000 and, at the same time, the maximum amount that can be borrowed is being raised to as much as $300 million.
  • The term of the loan has been expanded from four years to five years and the initial repayment period of one year is now extended to two years.
  • Interest to be paid on the loan will be delayed for one year.
  • Companies need to demonstrate Earnings Before Interest Taxes Depreciation Amortization (EBITDA) to qualify for the loan. The different loans are based on either four times EBITDA or six times EBITDA depending on the current outstanding debt on the company's balance sheet.

As has been the case for all of the Federal lending programs, further details and clarification are expected.  We will alert you when these are released to the public! If you have any questions about whether or not your company is a candidate for the Main Street Lending program, please feel free to contact us.