Yesterday, the Federal Reserve announced the terms of a new “Main Street” lending facility and modifications to the size and scope of the two existing Main Street facilities, all of which are aimed at assisting corporate borrowers.
The Federal Reserve also released the first set of FAQs for these facilities.
The new facility will provide new loan borrowers with an opportunity to leverage their balance sheets and income to a greater degree, but will require the originating lender to retain a higher portion of the loan. The modifications to the existing facilities expand eligibility to larger businesses, but they also impose an affiliation test that will exclude some potential borrowers.
This alert memorandum summarizes the key takeaways from yesterday’s announcement, focusing on the major changes for both borrowers and lenders.