Fed Expands Main Street Lending Parameters: Act Now to Apply for Loans

After a lengthy comment period, the Department of Treasury has provided details about the expanded Main Street Lending Program, which seeks to help small and midsize businesses adversely affected by COVID-19. The program, included in COVID-19 federal disaster assistance funding, provides $600 billion in financing to businesses that were otherwise in sound financial condition before the pandemic. Note: Businesses that received support through the SBA Paycheck Protection Program (PPP) are eligible to receive a Main Street loan.

Expansion Overview

Under the announced expansions, the Federal Reserve Board lowered the minimum loan size and increased the maximum loan size, and extended the loan term to five years to provide greater flexibility to borrowers. Specifically, the lending program provides five-year loans between the range of $250,000 to $300 million with floating rates and deferred principal and interest payments. To be eligible, businesses must have no more than 15,000 employees or 2019 annual revenues of no more than $5 billion. Unlike other federal loan programs for struggling businesses, the Main Street loan cannot be forgiven. See additional details about the Main Street loan parameters.

Act Now on Loan Applications

Businesses seeking loans through the Main Street Lending program must act now. Funds will be awarded to those who act early, similar to other loan assistance programs under the Coronavirus Aid, Relief Assistance (CARES) Act, such as the PPP. Fed Chairman Jerome Powell indicated that the program was “days away” from making its first loan.

Engineered Tax Services recommends that applicants review the program parameters before approaching lenders. A lender will help a business determine whether they meet program requirements and the lender’s underwriting standards.

Eligible borrowers should submit an application and all required documents required by an eligible lender, which includes banks, credit unions, savings associations and U.S. branches or affiliates of foreign banks. See the U.S. Department of Treasury Community Development Financial Institutions website for a listing of certified CDFIs.

Additional Resources for Small Businesses

Small businesses seeking Main Street Lending loans may also want to review the Small Business Administration (SBA) COVID-19 Small Business Guidance & Loan Resources site for other funding options. See this Main Street Lending FAQ for additional details. Engineered Tax Services is committed to keeping you informed on all legislation pertaining to the effect of COVID-19 on your business. As a national specialty tax services business, we closely monitor federal and state legislation and guidance. Visit the ETS CARES Act Resource Center to stay updated through our quick navigation links.

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Julio Gonzalez

Julio Gonzalez

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