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***This article was originally published on July 24th, 2020 and was updated on November 18, 2020****
The Federal Reserve has lowered the minimum loan sizes for certain Main Street Lending Program (“Main Street”) facilities from $250,000 to $100,000. This was designed to make the program more accessible to companies that were hesitant to borrow more than $250,000. The Federal Reserve also provided guidance concerning how PPP Loans under $2 million dollars factor into determining Main Street loan sizes.
Earlier this year, many companies with fewer than 500 employees applied for loans under the Paycheck Protection Program (“PPP”). An alternative funding option is available to those companies, and for larger companies that were not eligible for PPP Loans. That option is available through the Federal Reserve’s Main Street Lending Program, which runs through December 31, 2020.
Main Street was established by the Federal Reserve to support lending to small and medium-sized businesses that were in sound financial condition before the COVID-19 pandemic. Over the past several months, it has been modified and expanded to allow more businesses access to financial support and repayment flexibility.
Main Street is administered through five credit facilities:
It is more inclusive than the PPP, increasing the maximum number of employees and loosening restrictions on the use of funds. However, it does not offer forgiveness, which is the PPP’s most attractive feature.
Eligibility differs between for-profit businesses and nonprofit organizations.
For-profit business eligibility includes:
Nonprofit organization eligibility is more stringent and includes requirements that the organization has been in continuous operation since January 1, 2015, has at least 10 employees, and meets several financial ratios.
Many of the terms are consistent across all five facilities and include:
Businesses that have participated in the PPP are also eligible to apply for a Main Street loan, assuming they meet the eligibility requirements and other terms.
We will post updates as we receive more information from the Federal Reserve on program implementation. More program information, required documents, and FAQs are available on the Main Street Lending Program website.
If you want to discuss how the Main Street Lending Program can help you manage the impact of COVID-19, contact a member of your client service team or Eric Bookbinder, CPA at 781-937-5134 / email@example.com, Jackie Reinhard, CPA at 781-937-5721 / firstname.lastname@example.org or Nicholas Tamvaklis, CPA, MST at 781-937-5147 / email@example.com. You can also visit DGC's coronavirus web page at dgccpa.com/coronavirus which is frequently updated with new resources to help you deal with the financial impact of the coronavirus on you and your business.
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