The new changes include:
The Federal Reserve also released an updated FAQ and updated terms sheets for each of the three lending facilities under the MSLP. Small and medium-sized businesses interested in the MSLP can apply for loans through their existing or a new private lender that is eligible and participating in the program. The official start date of the program is expected to be released shortly.
This is not the first time the Federal Reserve has updated the terms of the MSLP. On April 30, the Federal Reserve released revised term sheets and Frequently Asked Questions for the MSLP. Among the updated April 30 terms were changes to expand the criteria for businesses eligible for loans, changes to the interest rate, reduction of the minimum loan size and the establishment of a third lending facility, the Main Street Priority Loan Facility, intended for higher leveraged borrowers.
On April 9, the Federal Reserve released initial details on the MSLP. The program authorizes the Federal Reserve to establish a special purpose vehicle (SPV) to purchase up to $600 billion of newly issued and existing loans from eligible lenders. The lenders in turn provide debt financing to small and mid-size businesses. The loans will be directly administered through private banking institutions who will sell majority participations in the loans to the SPV, with lenders retaining a small portion of the loans.
We will continue to monitor new information as it is released and will provide further guidance to you as it becomes available, including the anticipated start date for the program.
The Coronavirus Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID-19 situation develops.
Author Justin Csik is an associate in the Corporate & Securities Department at Klehr Harrison.