
Managing Money In A Crisis
Weekly tips sent straight to your inbox
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 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’s undergone several changes since its launch to make it more of a substitute for PPP funding as small businesses wait for more stimulus funding.
The Main Street Lending Program is 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 can apply for a new loan or to have more funds added to a current loan through one of five programs.
Qualifications depend on the program that you end up using. The Main Street New Loan Facility (MSNLF), Main Street Priority Loan Facility (MSPLF) and Main Street Expanded Loan Facility (MSELF) all have the same requirements. The two nonprofit programs — Nonprofit Organization New Loan Facility (NONLF) and Nonprofit Organization Expanded Loan Facility (NOELF) — have a separate set of requirements.
Businesses must meet the following requirements to qualify for a loan through these three programs:
To qualify for these two programs, your business must:
You may also need to meet other earnings and cash standards.
If you take out a loan through the Main Street Lending Program, your business must commit to refraining from the following until one year after your business pays off the loan:
Currently, loans start at $100,000 for MSNLF, MSPLF and NONLF. And they start at $10 million for the MSELF and NOELF programs.
The maximum amount also depends 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.
Loan program | Maximum 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 |
Say you are applying 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 is $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’d have to subtract the $150,000 from the $4 million, leaving you with a maximum loan amount of $3.85 million.
Three main factors affect how much this loan program costs — the interest rate, fees and loan term.
Main Street Lending Program loans come 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.
All programs come with a number of fees.
Other fees you may incur are servicing and transaction fees — these also vary by loan but don’t exceed 1% each.
Main Street Loans come 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.
The Federal Reserve Bank of Boston has a tool for finding banks that provide Main Street Loans. Simply select 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.
You can apply by submitting an application directly through an eligible lender. Contact the lender you’d like to work with after familiarizing yourself with the program you’re interested in.
The Federal Reserve requires businesses to primarily use the funds to cover payroll costs and retain 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.
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.
The Main Street Loan Program offers higher loan amounts, as well as fewer eligibility restrictions on who can qualify and how you spend your funds — though it’s mainly intended to cover payroll costs. It’s 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 March 31, 2021.
Are Main Street Loans a viable Plan B to Paycheck Protection Loans?
Here are a few pointers to make the most of this loan program:
The Main Street Lending Program can be a helpful option for businesses that are too large to qualify for an SBA loan. But its high minimum loan amount and relatively high rates for a coronavirus assistance loan make it one of the more expensive government financing options out there.
Read our guide to business loans during the COVID-19 outbreak to learn about more of your options.
Here’s where to get financial help for yourself and your business if you’ve been affected by the storm in February 2021.
Grants of up to $10 million for businesses that rely on ticket sales.
Here’s how the ECRA could affect small business owners — if it’s passed.
This small bank serves small and midsized businesses in Southwest WA and Portland, OR.
This program widens its reach to help more business owners as we wait for the next stimulus bill.
Find out if your business can qualify for this simplified application form.
160+ lenders across all 50 states that are accepting Main Street Lending Program applications.
A New York Times report found that businesses hadn’t received an SBA disaster loan over $150,000 since May.
The HEALS Act would create a new COVID-19 recovery loan for underserved businesses that took a hit.
Small businesses could have an easier time getting full forgiveness under the proposed legislation.