New Emergency Business Loan Options Available

Yesterday, the Federal Reserve announced the opening of its Main Street New Loan Facility (MSNLF) and Main Street Expanded Loan Facility (MSELF). These facilities are authorized to facilitate a total of $600 billion of lending to small and medium-sized businesses under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

The funds will be provided by eligible lenders. Eligible lenders are U.S. insured depository institutions, U.S. bank holding companies and U.S. savings and loan holding companies.

Eligible Borrower

An eligible borrower is a business that:

  • has up to 10,000 employees or up to $2.5 billion in 2019 annual revenues.
  • is a business that is created or organized in the U.S. or under the laws of the U.S. with significant operations in and a majority of its employees based in the U.S.
  • is not already participating in the Primary Market Corporate Credit Facility, which was established by the Federal Reserve on March 23, 2020 to support credit to employers through new bond and loan issuance.

Eligible borrowers may not participate in both the MSNLF and MSELF.

Eligible Loan

An eligible MSNLF loan is an unsecured loan made by an eligible lender that was originated on or after April 8, 2020. An eligible MSELF loan is one that originated before April 8, 2020 and has been subsequently upsized.

Loan Features

Eligible loans must have the following terms:

  • 4-year maturity
  • Amortization of principal and interest deferred for one year
  • Adjustable interest rate at the secured overnight financing rate plus 2.5 – 4%
  • Minimum loan size of $1 million
  • Maximum size of a MSNLF loan is the lesser of: 1) $25 million or 2) an amount that, when added to the eligible borrower’s existing outstanding and committed but undrawn debt, does not exceed four times the eligible borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA)
  • Maximum size of a MSELF loan is the lesser of: 1) $150 million, 2) 30% of the borrower’s existing outstanding and committed but undrawn bank debt, or 3) an amount that, when added to the borrower’s existing debt, does not exceed six times the borrower’s 2019 EBITDA
  • Prepayment permitted without penalty

Required Attestations

Eligible borrowers will attest that they:

  • require financing due to circumstances caused by the COVID-19 pandemic,
  • will not use the funds to repay or refinance pre-existing loans and lines of credits with the eligible lender,
  • will refrain from using the proceeds of the upsized tranche of the MSELF loan to repay other debt of equal or lower priority, with the exception of mandatory principal payments, unless the eligible borrower has first repaid the eligible loan in full,
  • will refrain from using the proceeds of the loan to repay other loan balances,
  • will refrain from repaying other debt of equal or lower priority, with the exception of mandatory principal payments, unless the eligible borrower has first repaid the eligible loan in full,
  • will follow compensation, stock repurchase, and capital distribution restrictions that apply to direct loan programs under of the CARES Act, and
  • will make other required attestations.

Loan Origination Fee

Under the MSNLF, an eligible borrower will pay the lender a 1% origination fee of the principal amount of the loan. Under the MSELF, an eligible borrower will pay the lender a fee of 100 basis points of the principal amount of the upsized tranche of the eligible loan at the time of upsizing.

If you have any questions about applying for an emergency business loan under the Main Street New Loan Facility, please contact our Emergency Loan Consultants on our Crisis Response and Recovery hotline at 212.223.6216.


Lou Pizzileo An accounting and advisory Partner at Grassi, Lou Pizzileo plays a key role serving the firm’s clients in the manufacturing and distribution, technology and specialty finance practices. Entrepreneurial minded, Lou recently led the firm’s efforts in assisting companies with capturing available stimulus provided by the CARES Act, including the Paycheck Protection Program. He also recently created and leads the firm’s IT accounting practice. Lou... Read full bio