The Fed Announces Program To Provide Up To $2.3 Trillion In Loans

On April 9, 2020, the Federal Reserve System (the “Fed”) announced that is creating or expanding nine lending program to provide up to $2.3 trillion in loans. Congress and the Department of Treasury have made possible this new generation of lending programs by extending nearly $450 billion to cover losses that the Fed might sustain.

We provide a summary of and additional resources describing the Fed’s new or expanded lending programs below.

The programs are wide-reaching and, in the aggregate, provide relief directly and indirectly to U.S. businesses of all sizes.

Two of the nine programs are aimed specifically at mid-sized and small businesses – The Main Street New Loan Facility and The Main Street Expanded Loan Facility (referred to together as the Main Street Loan Program).

The Main Street New Loan Facility provides support for loans by banks to small and mid-sized businesses that were in good financial standing before the crisis by offering 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion in 2019 revenue.

The Main Street Expanded Loan Facility provides for the purchase by the Fed from eligible lenders of upsized tranches of existing loans to such companies that were originated before April 8, 2020.

The guidance issued on April 9 provides that lenders should use customary underwriting standards, with important exceptions provided under the Main Street Loan Program.

The Main Street Loan Program (both New and Expanded facilities) is available to businesses in addition to loans received under the Paycheck Protection Program provided in the Coronavirus Aid, Relief, and Economic Security Act enacted March 27, 2020.

The minimum loan size under both new facilities is $1,000,000. There are caps described in the facilities’ term sheets linked below.

The Fed and Treasury are inviting comments through April 16, 2020 regarding the Main Street Loan Program. We expect that the program will launch shortly thereafter. If your business might benefit from these facilities, you should contact your bank immediately to establish a line of communication and learn of the bank’s interpretations of the lending and documentation requirements.

Summary of The Fed’s Recent Responses to the COVID-19 Financial Crisis

• Federal Reserve Board – COVID-19 ACTIONS

 

Term Sheets and Descriptions (already included in summary above):

1. Primary Market Corporate Credit Facility Term Sheet 4-9-2020
2. Secondary Market Corporate Credit Facility Term Sheet 4-9-2020
3. Term Asset-Backed Securities Loan Facility Term Sheet 4-9-2020
4. Money Market Mutual Fund Liquidity Facility Term Sheet 3-23-2020
5. Commercial Paper Funding Facility Explanation 3-23-2020
6. Paycheck Protection Lending Facility Term Sheet 4-9-2020
7. Main Street New Loan Facility Term Sheet 4-9-2020
8. Main Street Expanded Loan Facility Term Sheet 4-9-2020
9. Municipal Liquidity Facility Term Sheet 4-9-2020
10. Cooley – Treasury and Federal Reserve Board Announce Details of $600 Billion Main Street Lending Program

If you have any questions, please contact your HM&M advisor.

For more information check out HM&M’s COVID-19 Resources page.

HM&M COVID-19 Resources