Recently the Federal Reserve announced changes to the Main Street Loan Program “MSLP” which lowered the minimum loan amount from $250,000 to $100,000. The Fed also waived transaction fees on all loans less than $250,000. The changes were brought forth in an effort to make the program more available to small and medium sized businesses in response to the COVID-19 pandemic. In addition, the Fed released a Q&A statement clarifying that PPP loans up to $2M may be excluded from determining the maximum loan amount. However, the amount excluded must be eligible for forgiveness based on the guidelines set forth by the SBA.
In order to qualify for the program, businesses must have either 15,000 employees or fewer, or had less than $5 billion in revenues during 2019. Loans are granted with 5-year terms and bear interest at LIBOR + 3 percent. Principal payments are deferred for two years and then require payments of 15 percent of the amortized balance in years three and four. The remaining 70 percent is paid in full upon maturity. Interest payments are also deferred for one year and any unpaid interest is eligible for capitalization.