May 19, 2020
On April 30, after receiving public feedback on the initial program terms, the Federal Reserve announced revisions to the Main Street Lending Program intended to expand financial support to small and mid-sized businesses that were in good financial health prior to the COVID-19 pandemic. The revisions serve to broaden some of the eligibility criteria to allow more companies and lenders to participate in the program as well as improve efficiency with existing loans, including by allowing interest to accrue at LIBOR (versus the still developing SOFR replacement). The revised MSLP also now includes three facilities – one for up to $25 million in new eligible term loans that are not subordinated to any existing debt of the borrower, one for up to $25 million in new eligible priority term loans that rank senior to or pari passu with the borrower's other existing debt, and one for up to $200 million in incremental eligible term or revolving loans that upsize the borrower's existing loan facility and rank senior or pari passu with the borrower's other existing debt. Despite efforts to expand and improve the terms of the MSLP, restrictions remain that make the Facilities impractical for many leveraged borrowers. The revised program also introduces new restrictions and hurdles to eligibility, in particular, incorporation of certain "affiliation rules" without the expected carveouts, which will keep this relief out of reach for certain borrowers.