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Effective June 8, 2020 1

Main Street Priority Loan Facility

Program: The Main Street Priority Loan Facility (“Facility”), which has been authorized under section 13(3) of
the Federal Reserve Act, is intended to facilitate lending to small and medium-sized Businesses by Eligible
Lenders. Under the Facility, the Main Street New Loan Facility (“MSNLF”), and the Main Street Expanded
Loan Facility (“MSELF”), the Federal Reserve Bank of Boston (“Reserve Bank”) will commit to lend to a single
common special purpose vehicle (“SPV”) on a recourse basis. The SPV will purchase 95% participations in
Eligible Loans from Eligible Lenders. Eligible Lenders will retain 5% of each Eligible Loan. The Department of
the Treasury, using funds appropriated to the Exchange Stabilization Fund under section 4027 of the
Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), will make a $75 billion equity investment in
the single common SPV in connection with the Facility, the MSNLF, and the MSELF. The combined size of the
Facility, the MSNLF, and the MSELF will be up to $600 billion.
Eligible Lenders: An Eligible Lender is a U.S. federally insured depository institution (including a bank, savings
association, or credit union), a U.S. branch or agency of a foreign bank, a U.S. bank holding company, a U.S.
savings and loan holding company, a U.S. intermediate holding company of a foreign banking organization, or
a U.S. subsidiary of any of the foregoing.
Eligible Borrowers: An Eligible Borrower is a Business 2 that:
1. was established prior to March 13, 2020;
2. is not an Ineligible Business; 3
3. meets at least one of the following two conditions: (i) has 15,000 employees or fewer, or (ii) had
2019 annual revenues of $5 billion or less;
4. is created or organized in the United States or under the laws of the United States with significant
operations in and a majority of its employees based in the United States;
5. does not also participate in the MSNLF, the MSELF, or the Primary Market Corporate Credit Facility;
and
6. has not received specific support pursuant to the Coronavirus Economic Stabilization Act of 2020
(Subtitle A of Title IV of the CARES Act). 4

The Board of Governors of the Federal Reserve System (“Board”) and the Secretary of the Treasury may
make adjustments to the terms and conditions described in this term sheet. Any changes will be announced
on the Board’s website.
2 For purposes of the Facility, a Business is an entity that is organized for profit as a partnership; a limited
liability company; a corporation; an association; a trust; a cooperative; a joint venture with no more than
49 percent participation by foreign business entities; or a tribal business concern as defined in 15 U.S.C.
§ 657a(b)(2)(C), except that “small business concern” in that paragraph should be replaced with “Business” as
defined herein. Other forms of organization may be considered for inclusion as a Business under the Facility
at the discretion of the Federal Reserve.
3 For purposes of the Facility, an Ineligible Business is a type of business listed in 13 CFR 120.110(b)-(j) and
(m)-(s), as modified by regulations implementing the Paycheck Protection Program established by section
1102 of the CARES Act (“PPP”) on or before April 24, 2020. The application of these restrictions to the Facility
may be further modified at the discretion of the Federal Reserve.
4 For the avoidance of doubt, Businesses that have received PPP loans are permitted to borrow under the
Facility, provided that they are Eligible Borrowers.
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Eligible Loans: An Eligible Loan is a secured or unsecured term loan made by an Eligible Lender(s) to an
Eligible Borrower that was originated after April 24, 2020, provided that the loan has all of the following
features:
1. 5 year maturity;
2. principal payments deferred for two years and interest payments deferred for one year (unpaid
interest will be capitalized);
3. adjustable rate of LIBOR (1 or 3 month) + 300 basis points;
4. principal amortization of 15% at the end of the third year, 15% at the end of the fourth year, and a
balloon payment of 70% at maturity at the end of the fifth year;
5. minimum loan size of $250,000;
6. maximum loan size that is the lesser of (i) $50 million or (ii) an amount that, when added to the
Eligible Borrower’s existing outstanding and undrawn available debt, does not exceed six times the
Eligible Borrower’s adjusted 2019 earnings before interest, taxes, depreciation, and amortization
(“EBITDA”); 5
7. at the time of origination and at all times the Eligible Loan is outstanding, the Eligible Loan is senior
to or pari passu with, in terms of priority and security, the Eligible Borrower’s other loans or debt
instruments, other than mortgage debt; and
8. prepayment permitted without penalty.
Loan Classification: If the Eligible Borrower had other loans outstanding with the Eligible Lender as of
December 31, 2019, such loans must have had an internal risk rating equivalent to a “pass” in the Federal
Financial Institutions Examination Council’s supervisory rating system on that date.
Assessment of Financial Condition: Eligible Lenders are expected to conduct an assessment of each
potential borrower’s financial condition at the time of the potential borrower’s application.
Loan Participations: The SPV will purchase at par value a 95% participation in the Eligible Loan. The SPV and
the Eligible Lender will share risk in the Eligible Loan on a pari passu basis. The Eligible Lender must retain its
5% of the Eligible Loan until it matures or the SPV sells all of its participation, whichever comes first. The sale
of a participation in the Eligible Loan to the SPV will be structured as a “true sale” and must be completed
expeditiously after the Eligible Loan’s origination.
Required Lender Certifications and Covenants: In addition to other certifications required by applicable
statutes and regulations, the following certifications and covenants will be required from Eligible Lenders:
•

The Eligible Lender must commit that it will not request that the Eligible Borrower repay debt
extended by the Eligible Lender to the Eligible Borrower, or pay interest on such outstanding
obligations, until the Eligible Loan is repaid in full, unless the debt or interest payment is mandatory
and due, or in the case of default and acceleration.

•

The Eligible Lender must commit that it will not cancel or reduce any existing committed lines of
credit to the Eligible Borrower, except in an event of default.

•

The Eligible Lender must certify that the methodology used for calculating the Eligible Borrower’s
adjusted 2019 EBITDA for the leverage requirement in section 6(ii) of the Eligible Loan paragraph
above is the methodology it has previously used for adjusting EBITDA when extending credit to the
Eligible Borrower or similarly situated borrowers on or before April 24, 2020.

The methodology used by the Eligible Lender to calculate adjusted 2019 EBITDA must be the methodology
it has previously used for adjusting EBITDA when extending credit to the Eligible Borrower or similarly
situated borrowers on or before April 24, 2020.

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•

The Eligible Lender must certify that it is eligible to participate in the Facility, including in light of the
conflicts of interest prohibition in section 4019(b) of the CARES Act.

Required Borrower Certifications and Covenants: In addition to other certifications required by applicable
statutes and regulations, the following certifications and covenants 6 will be required from Eligible Borrowers:
•

The Eligible Borrower must commit to refrain from repaying the principal balance of, or paying any
interest on, any debt until the Eligible Loan is repaid in full, unless the debt or interest payment is
mandatory and due. However, the Eligible Borrower may, at the time of origination of the Eligible
Loan, refinance existing debt owed by the Eligible Borrower to a lender that is not the Eligible
Lender.

•

The Eligible Borrower must commit that it will not seek to cancel or reduce any of its committed lines
of credit with the Eligible Lender or any other lender.

•

The Eligible Borrower must certify that it has a reasonable basis to believe that, as of the date of
origination of the Eligible Loan and after giving effect to such loan, it has the ability to meet its
financial obligations for at least the next 90 days and does not expect to file for bankruptcy during
that time period.

•

The Eligible Borrower must commit that it will follow compensation, stock repurchase, and capital
distribution restrictions that apply to direct loan programs under section 4003(c)(3)(A)(ii) of the
CARES Act, except that an S corporation or other tax pass-through entity that is an Eligible Borrower
may make distributions to the extent reasonably required to cover its owners’ tax obligations in
respect of the entity’s earnings.

•

The Eligible Borrower must certify that it is eligible to participate in the Facility, including in light of
the conflicts of interest prohibition in section 4019(b) of the CARES Act.

Retaining Employees: Each Eligible Borrower that participates in the Facility should make commercially
reasonable efforts to maintain its payroll and retain its employees during the time the Eligible Loan is
outstanding.
Transaction Fee: An Eligible Lender will pay the SPV a transaction fee of 100 basis points of the principal
amount of the Eligible Loan at the time of origination. The Eligible Lender may require the Eligible Borrower
to pay this fee.
Loan Origination and Servicing Fees: An Eligible Borrower will pay an Eligible Lender an origination fee of up
to 100 basis points of the principal amount of the Eligible Loan at the time of origination. The SPV will pay an
Eligible Lender 25 basis points of the principal amount of its participation in the Eligible Loan per annum for
loan servicing. 7
Facility Termination: The SPV will cease purchasing participations in Eligible Loans on September 30, 2020,
unless the Board and the Department of the Treasury extend the Facility. The Reserve Bank will continue to
fund the SPV after such date until the SPV’s underlying assets mature or are sold.

An Eligible Lender is expected to collect the required certifications and covenants from each Eligible
Borrower at the time of origination of the Eligible Loan. Eligible Lenders may rely on an Eligible Borrower’s
certifications and covenants, as well as any subsequent self-reporting by the Eligible Borrower.
7 Further information regarding credit administration and loan servicing will be made available on the
Board’s website.
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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102