October 2020 Changes to the Main Street Lending Program

On October 30, 2020, The Federal Reserve updated two important conditions of the Main Street Lending Program to benefit smaller businesses and make it easier for them to obtain a Main Street Loan. The Main Street Lending Program supports lending to small and medium-sized for-profit businesses and nonprofit organizations that were in sound financial condition before the COVID-19 pandemic but lack access to credit on reasonable terms. The Main Street Lending Program has allocated almost 400 loans totaling, $3.7 billion. The following changes have gone into effect as of October 30, 2020.

• The minimum loan size for loans has been reduced significantly to encourage smaller businesses to apply for Main Street Loans. The loan size for Main Street facilities has been reduced to $100,000 from $250,000. Additionally, fees have been adjusted to reflect the changes in loan prices.

• The Board and Department of the Treasury clarified that Payment Protection Loans of up to $2 million may be excluded when determining the maximum loan size for the Main Street Lending Program. This should help more smaller businesses obtain Main Street loans than before.

• Borrowers were most concerned with the “outstanding debt” requirement of the Main Street term sheet and whether or not Payment Protection Loans were included in that total. The Federal Reserve has since updated their term sheet to specify the exclusion of PPP loans from that total.