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Main Street Lending Program — everything you need to know

The Main Street Lending program is no longer available. But there are other COVID-19 relief options.

The federal government regularly revises the details of these programs as the coronavirus outbreak affects more businesses. We’ll update this page regularly as new information unfolds.

The Federal Reserve’s Main Street Lending ended on January 8, 2021. It was originally designed to serve small and midsize businesses that couldn’t qualify for other stimulus funding, like the Paycheck Protection Program (PPP).

But it underwent several changes since its launch. Here’s how it used to work.

Main Street Lending Program alternatives

These coronavirus assistance programs are still available to small and businesses that took a hit in 2020.

  • First and Second Draw PPP loans are available until May 31, 2021. This time, more businesses and nonprofits are eligible for the PPP and self-employed borrowers can qualify for more funds. Read our guide to learn about how the new PPP works.
  • Economic Injury Disaster Loans (EIDL) are still available to businesses that haven’t already applied, and the American Rescue Plan Act relaunched the targeted grant program. EIDL applications are available on the SBA website.
  • The Restaurant Revitalization Fund offers grants to small and midsize food service businesses based on the difference between 2019 and 2020 revenue — or monthly payroll expenses for businesses established after 2019.
  • The Shuttered Venue Operators Grant offers grants to businesses that rely on ticket sales equal to around half of your 2019 revenue.
  • Local loans and grants will become increasingly available through nonprofit lenders like community development financial institutions and farm credit systems, after receiving an injection of funds from the American Rescue Plan Act.

Apply for an online business loan today

Government loan programs can be slow-moving. Online business loans can be a better option if you need funding fast. Fill out the form to compare lenders that offer the kind of loan your business needs.

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Main Street Lending Program at a glance

  • Loan amounts: $100,000 to $300 million, depending on the program and your 2019 earnings
  • Rates: LIBOR + 3%
  • Fees: Origination fee of 0% to 2%, potential 1% facility fee on new loans
  • Terms: 5 years
  • Deferment: 1 year
  • Basic eligibility criteria: No more than 15,000 employees or $5 billion in annual revenue

What was the Main Street Lending Program?

The Main Street Lending Program was a series of government loan programs from the Federal Reserve for small and midsize businesses struggling during the coronavirus outbreak. Under this program, eligible businesses could apply for a new loan or to have more funds added to a current loan through one of five programs.

Who qualified?

Eligibility depended on the program that you applied for. The Main Street New Loan Facility (MSNLF), Main Street Priority Loan Facility (MSPLF) and Main Street Expanded Loan Facility (MSELF) all had the same requirements. The two nonprofit programs — Nonprofit Organization New Loan Facility (NONLF) and Nonprofit Organization Expanded Loan Facility (NOELF) — had a separate set of requirements.

MSNLF, MSPLF and MSELF requirements

Businesses were required to meet the following criteria to qualify for a loan through these three programs:

  • No more than 15,000 employees or $5 billion in annual revenue
  • Established before March 13, 2020
  • Currently in business
  • Created and operating in the US
  • Majority of employees based in the US
  • No loans through the Primary Market Corporate Credit Facility (PMCCF) loan program
  • No current loans in any of the other programs under Main Street Lending Program
  • Not a members of Congress or restricted from borrowing under the CARES Act, aside from PPP and EIDL

NONLF and NOELF requirements

To qualify for these two programs, your business must have met these criteria:

  • No more than 15,000 employees or $5 billion in annual revenue
  • At least 10 employees
  • In business continuously since January 1, 2015
  • Created and operating in the US
  • Majority of employees based in the US
  • Funding of less than $3 billion
  • Revenue outside of donations totaling at least 60% of expenses from 2017 to 2019
  • No current loans in any of the other programs under Main Street Lending Program
  • Not a members of Congress or restricted from borrowing under the CARES Act, aside from PPP and EIDL

You may also needed to meet other earnings and cash standards.

Main Street Lending borrower commitments

If you took out a loan through the Main Street Lending Program, your business was required to commit to refraining from the following until one year after your business pays off the loan:

  • Buying equity security from the business or a parent company
  • Paying dividends or making other capital distributions
  • Paying a higher compensation to an employee or officer who earned an annual compensation of over $425,000 in 2019
  • Paying severance equal to more than twice the annual compensation of employees or officers who earned over $425,000 in 2019
  • Paying over $3 million to employees and officers who earned that amount in total compensation for 2019
  • Paying more than 50% of any compensation over $3 million to employees who earned over $3 million in 2019

How much could I borrow?

Loans started at $100,000 for MSNLF, MSPLF and NONLF. And they started at $10 million for the MSELF and NOELF programs.

The maximum amount also depended on the program and your 2019 earnings before interest, taxes, depreciation and amortization (EBITDA) — not including PPP loans under $2 million — or average quarterly revenue.

Maximum loan amounts

Loan programMaximum loan amount
MSNLF$35 million or 4 times your EBITDA, whichever is less
MSPLF$50 million or 6 times your EBITDA, whichever is less
MSELF$300 million or 6 times your EBITDA, whichever is less
NONLF$35 million or your average 2019 quarterly revenue, whichever is less
NOELF$300 million or your average 2019 quarterly revenue, whichever is less
Let’s take a look at an example …

Say you applied for MSNLF and had a business that earned $1 million in EBITDA for 2019. Without any loans in the works, the maximum you could borrow would have been $4 million.

However, say you were approved for a Paycheck Protection Loan of $150,000, but haven’t received the funds yet.

In that case, you would have had to subtract the $150,000 from the $4 million, leaving you with a maximum loan amount of $3.85 million.

How much did it cost?

Three main factors affected how much this loan program costs — the interest rate, fees and loan term.

Interest rates

Main Street Lending Program loans came with a variable interest rate of the one or three month LIBOR plus 3%. Since the LIBOR rate is calculated each night and reported every month or three months depending on the average used, there’s a strong amount of variation — which can make calculating your total cost difficult.

Fees

All programs came with a number of fees.

  • MSNLF, MSPLF and NONLF. Each of these programs has an origination fee of 1% on loans over $250,000 and 2% on loans under $250,000.
  • MSELF and NOELF. Both programs have a fee referred to as an upsize fee of 0.75% of the amount difference.

Other fees you may have incurred are servicing and transaction fees — these also varied by loan but didn’t exceed 1% each.

Terms

Main Street Loans came with a five-year term, with the option of deferment for the first year. If interest isn’t paid during the first year, it will be capitalized.

Where could I get a Main Street Loan?

The Federal Reserve Bank of Boston had a tool for finding banks that provide Main Street Loans. You could use it by selecting your state using the interactive map to find out which lenders are working with the program. Each also lists whether the lender is providing loans to for-profit businesses or nonprofits.

How do I apply?

Currently, you can’t apply for a Main Street Loan. When applications were open, you could apply by submitting an application directly through an eligible lender.

How can I use the funds?

If you received a Main Street Business Loan, you’re required to primarily use the funds for payroll costs and retaining employees, though there are no specific guidelines on which portion of the loan should go toward those expenses.

You can’t use the loan to refinance a loan or line of credit, or make debt payments.

How do repayments work?

Borrowers make repayments directly to the lender, which then pays the SVP its portion of the loan. These loans come with monthly repayments, which begin one year after your loan is disbursed.

Since there’s no prepayment penalty, consider starting repayments as soon as possible during the deferment period to save on interest.

How did it compare to the PPP?

The Main Street Loan Program offered higher loan amounts, as well as fewer eligibility restrictions on who could qualify and how funds could be spent — though it’s mainly intended to cover payroll costs. It was also available to larger businesses than the SBA’s Paycheck Protection Program (PPP).

However, it comes with a higher rate that’s variable, which makes it more difficult to predict the cost than the PPP’s fixed interest rate. It also doesn’t come with the option for forgiveness, which you can get with the PPP. And while the Main Street Loan Program’s terms and deferment period are longer, making repayments more affordable, both can also lead to a higher loan cost.

With the Economic Aid Act, the PPP applications opened again in January 2021. First Draw and Second Draw loans will be available until May 31, 2021.

Were Main Street Loans a viable Plan B to Paycheck Protection Loans?

Bottom line

The Main Street Lending Program was a useful option for businesses that were too large to qualify for an SBA loan. But its high minimum loan amount and relatively high rates for a coronavirus assistance loan made it one of the more expensive government financing options out there — and one of the least popular programs.

Read our guide to business loans during the COVID-19 outbreak to learn about more of your options.

Frequently asked questions

Did the Main Street Lending Program offer SBA loans?

No, the Main Street Lending Program was run by the Federal Reserve, not the Small Business Administration (SBA). The SBA doesn’t offer or back loans through this program.

Is the Federal Reserve still accepting feedback on this program?

The Federal Reserve stated that it stopped accepting feedback on its guidelines for both programs on April 16, 2020. However, the Main Street Lending Program feedback form on its website is still functional as of March 11, 2021. You can try submitting feedback as long as the form works — though it might not be considered.

Is there a penalty for paying off this loan early?

No, there are no prepayment penalties for loans through the Main Street Lending Program.

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