Holland & Knight Provides Comments to Treasury, Federal Reserve on Main Street Lending Program
- Holland & Knight has responded to the Federal Reserve's solicitation for input from lenders, borrowers and other stakeholders regarding the Main Street Lending Program, which will provide up to $600 billion in loans for small and midsize businesses.
- The firm provided a series of comments, questions and recommendations addressing benefits and program expansion on behalf of clients across a wide range of industries and of diverse sizes.
- Our attorneys will provide updates on responses from the Federal Reserve or Treasury, as well as any changes to term sheets and guidance, as the information becomes available.
Holland & Knight has responded to the Federal Reserve's solicitation for input from lenders, borrowers and other stakeholders regarding the Main Street Lending Program, which was established on April 9, 2020. (See Holland & Knight's previous alert, "Federal Reserve Board, Treasury Department Unveil New and Expanded Credit Facilities," April 10, 2020.)
The Federal Reserve's comment period addressed the term sheets for both the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF). Holland & Knight provided a series of comments, questions and recommendations on April 16, 2020, on behalf of clients across a wide range of industries and of diverse sizes.
Read Holland & Knight's full comments to the Secretary of the U.S. Department of the Treasury and the Chairman of the Federal Reserve. Read a complete summary of the program, including overviews of the term sheets for both MSNLF and MSELF.
Holland & Knight provided comments on the following topics:
- expanding eligibility for (b)(4) programs under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
- clarification of what the "US business" includes
- expansion of eligible lenders beyond U.S. financial institutions
- expansion of eligible loans under the MSELF to more than just term loans
- clarification on the use of Secured Overnight Financing Rate (SOFR) as the rate of interest on eligible loans
- increase of the maximum loan size under each of the MSNLF and the MSELF
- clarification on the defined term earnings before interest, taxes, depreciation, and amortization (EBITDA)
- clarification on the availability of the MSNLF and the MSELF to nonprofits
- clarification on the amortization of the loans
- clarification on how the interest on the MSNLF and the MSELF will accrue and be paid
- clarification on the use of proceeds of the MSNLF and the MSELF loans
- clarification on the prohibition of prepaying other debt
- modification of the prohibitions on capital distributions
- revision of the four-year maturity provision in the MSELF guidelines
- request for guidance on what are "reasonable efforts to maintain" payroll and employees
- clarification on assignability of the MSNLF and MSELF loans
- expansion of the Main Street Lending Program to businesses larger than 10,000 employees who meet certain credit ratings
Holland & Knight will provide updates on responses from the Federal Reserve or Treasury, as well as any changes to term sheets and guidance, as soon as the information becomes available. For questions regarding these new and expanded facilities, please contact the authors.
DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.