Business and nonprofit organization Lending Program

Main Street Lending Program1

These are unprecedented, challenging times. Small- and mid-sized companies and nonprofit organizations affected by the COVID-19 pandemic could potentially get help with a loan from the Main Street Lending Program.

The Federal Reserve Board will stop accepting MSLP loan submissions on December 14, 2020, prior to the program end date on December 31, 2020. For the latest information, including term sheets and FAQs, please visit the Federal Reserve MSLP homepage or the Federal Reserve Bank of Boston MSLP homepage.

Main Street Lending Program at a glance

The Federal Reserve launched the Main Street Lending Program (MSLP) through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The program allows the Federal Reserve to purchase loans through a special purpose vehicle. These loans are for small- and medium-sized businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic.

U.S. Bank will initially consider loans under the program for customers with an existing U.S. Bank commercial or business lending relationship in order to support our credit underwriting process. The program requires U.S. Bank to assess each potential borrower’s pre-pandemic financial condition and post-pandemic prospects, taking into account the payment deferral features of MSLP loans.

Eligibility requirements2

For businesses

Businesses must meet the following minimum eligibility criteria (among others) to participate in the Main Street Lending Program:

  • The company must be a U.S. business that was established before March 13, 2020.
  • It must have 15,000 or fewer employees or 2019 annual revenues of $5 billion or less. For information on how to calculate employees and 2019 revenues review the Main Street Lending Program FAQs on the Federal Reserve website.
  • After receiving a Main Street loan — and for 12 months after the loan has been repaid — the business must follow the restrictions outlined in the CARES Act related to stock buybacks, dividends and compensation.

For nonprofits

Nonprofit organizations must meet the following minimum eligibility criteria (among others) to participate in the Main Street Lending Program:

  • The nonprofit must be a tax-exempt organization described in section 501(c)(3) of the Internal Revenue Code or a tax-exempt veterans' organization described in section 501(c)(19) of the Internal Revenue Code. It must also have at least 10 employees and an endowment of less than $3 billion.2
  • Non-donation revenues for the nonprofit must be equal to or greater than 60% of expenses for the period from 2017 through 2019, with a 2019 operating margin of 2% or more.
  • The nonprofit must be an entity formed in the U.S., in continuous operation since January 1, 2015, with significant operations in and a majority of their employees based in the United States.

Main Street Lending options

The Main Street Lending Program includes three different lending options for businesses: Main Street New Loan Facility, Main Street Priority Loan Facility and Main Street Expanded Loan Facility. The program also includes two lending options for nonprofit organizations: Nonprofit Organization New Loan Facility and Nonprofit Organization Expanded Loan Facility.

The loans share some common features.

  • They are full-recourse and are not forgivable.
  • Terms are five years.
  • Borrowers can prepay the loans without penalty.
  • Principal payments are deferred for two years.
  • Interest payments are deferred for one year, but interest accrues during that time.
  • Eligible borrowers must make commercially reasonable efforts to retain employees during the term of the loans.

Three lending options for businesses

There are differences among the three business loans as outlined below.

Main Street New Loan Facility (MSNLF)

Type: Offers borrowers new secured or unsecured term loans

Loan size: Between $100,000 and $35 million; subject to certain leverage limitations

Amortization: 0% year one; 0% year two; 15% year three; 15% year four; 70% year five

Main Street Priority Loan Facility (MSPLF)

Type: Offers borrowers new secured or unsecured term loans

Loan size: Between $100,000 and $50 million; subject to certain leverage limitations

Amortization:  0% year one; 0% year two; 15% year three; 15% year four; 70% year five
 

Main Street Expanded Loan Facility (MSELF)

Type: Offers borrowers the opportunity to upsize their existing secured or unsecured term loans or revolving lines of credit

Loan size: Between $10 million and $300 million; subject to certain leverage limitations

Amortization: 0% year one; 0% year two; 15% year three; 15% year four; 70% year five

Two lending options for nonprofits

There are differences between the two nonprofit loans as outlined below.

Nonprofit Organization New Loan Facility (NONLF)

Type: Offers borrowers new secured or unsecured term loans

Loan size: Minimum loan is $100,000; maximum loan is the lesser of $35 million and the borrower’s average 2019 quarterly revenue

Amortization: 0% year one; 0% year two; 15% year three; 15% year four; 70% year five

Nonprofit Organization Expanded Loan Facility (NOELF)

Type: Offers borrowers the opportunity to upsize their existing secured or unsecured term loans or revolving lines of credit

Loan size: Minimum loan is $10 million; maximum loan is the lesser of $300 million and the borrower’s average 2019 quarterly revenue

Amortization:  0% year one; 0% year two; 15% year three; 15% year four; 70% year five
 

Frequently asked questions

Considerations before you apply

Here are requirements for the Main Street Lending Program:

  • Participating lenders to follow federal requirements for loan approval.
  • Borrowers to meet eligibility requirements, including the minimum requirements listed above.
  • Borrowers to commit to provide quarterly and annual financial reporting to the bank.
  • Borrowers to be willing and able to comply with the Federal Reserve’s restrictions around officer compensation, stock repurchases and capital distributions. These restrictions continue for 12 months after the MSLP loan is no longer outstanding.

Before taking the next step, you should understand:

  1. Meeting the Federal Reserve’s eligibility requirements is only the first step.
  2. The program requires U.S. Bank to conduct an assessment of each potential borrower’s pre-pandemic financial condition and post-pandemic prospects, taking into account the payment deferral features of MSLP loans. This assessment requires us to have a deep understanding of your business or organization and your management team, including an evaluation of the soundness of your financial condition prior to the onset of the COVID-19 pandemic.
  3. You will need to sign a certification in connection with your application.
  4. All of the restrictions and requirements of the program will apply, regardless of whether a Main Street loan is for $100,000 or $35 million or more. 

Also, you should carefully consider that the Federal Reserve may publicly disclose information about your business or organization. This includes: 

  • The names of lenders and borrowers
  • The amount borrowed
  • The interest rate
  • Overall costs, revenues and other fees

U.S. Bank will initially consider loans under the program for customers with an existing U.S. Bank commercial or business lending relationship in order to support our credit underwriting process.

Detailed information on the program can be found on the Federal Reserve website or on the Federal Reserve Bank of Boston website. You may choose to review the program with your legal and/or accounting advisors before you apply to determine the impact of program requirements on your business or organization.

Contact us.

Your U.S. Bank relationship manager or banker can walk you through the application process and keep you informed of details about the program as they become available.

Business Banking

For businesses and nonprofit organizations with up to $10 million in annual revenue, contact your relationship manager or connect with our Business Banking division.

Corporate & Commercial Banking

For businesses and nonprofit organizations with $10 million or more in annual revenue, contact your relationship manager or connect with our Corporate & Commercial Banking division.