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FaegreDrinker: CARES Act, Main Street Lending Program Summary for Small and Mid-Sized Businesses

April 14, 2020 |

On April 9, 2020, the Federal Reserve released term sheets for a Main Street Lending Program, a new program intended to provide liquidity to small and medium-sized businesses to help withstand the coronavirus crisis. The Main Street Lending Program enables up to $600 billion in new financing of eligible term loans from eligible lenders to eligible businesses and consists of the Main Street New Loan Facility (the MSNLF) and the Main Street Expanded Loan Facility (MSELF). The Department of the Treasury, using funds appropriated under section 4027 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), will provide $75 billion in equity to a single common special purpose vehicle (SPV) in connection with the MSNLF and the MSELF. The Federal Reserve Banks will lend the remainder of funds to the SPV for the MSNLF and the MSELF.

Although it targets similar businesses, the Main Street Lending Program is distinct from the mid-sized business loan program contemplated to be created under Section 4003(c)(3)(D) of the CARES Act, which remains unimplemented. Material features of the MSNLF and the MSELF and certain interpretive questions raised by the term sheets for the Main Street Lending Program are summarized below.

Who Is an Eligible Lender?

U.S. insured depository institutions, U.S. bank holding companies, and U.S. savings and loan holding companies are eligible lenders under this program. Nonbank lenders are not eligible lenders under this program.

Who Is an Eligible Borrower?

Businesses are eligible borrowers if they satisfy each of the following:

• Have up to 10,000 employees or less than $2.5 billion in 2019 annual revenues

• Were created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the United States

• Are not insolvent

Borrowers may only participate in one of the MSNLF, the MSELF or the separate Primary Market Corporate Credit Facility for U.S. issuers of certain corporate debt. Borrowers that have participated in the Paycheck Protection Program established under the CARES Act may also be eligible to participate in the MSNLF or the MSELF. Whether an entity organized and operating in the United States, but that has a foreign parent company or other foreign ownership, could be an eligible borrower remains one of several unanswered interpretive issues raised by the MSNLF and MSELF term sheets and is expected to be addressed prior to commencement of the program.


Matt Kuhn, Sandra Melissa Lopez, Remy Nshimiyimana, David A. Rubenstein, John E. Stoddard III, Sujata P. Wiese

Compliments of Faegre Drinker – a member of the EACCNY.