Withum COVID-19 Bill Update – 6/18/2020

Main Street Lending Program (“MSLP”):  The MSLP was first introduced back in April and there was a lot of initial press around the program as an alternative to the PPP for larger companies. Actually rolling it out to the public, however, became a slow and arduous project. The program went through several changes and enhancements to make it more accessible to both the middle and upper-middle markets. On June 17th it was announced that the loan portal was open to lenders. This program, much like the PPP, will be administered through banks/lenders rather than through the SBA.  

The MSLP is not yet available for potential borrowers to obtain loans, but now that it is open to lenders, we suspect it will open up to borrowers shortly. Here is a link to FAQs that are helpful as this program continues to evolve. 

Below are some highlights of the MSLP:

• These loan products are NOT forgivable and do require security (assets, personal guarantee, etc.).
• Borrower Eligibility:
  • Must have 15,000 or fewer employees OR less than $5 billion of revenue in 2019.
  • Must not be an ineligible business and must be a US-based business established prior to March 13, 2020.
  • Must not have received support pursuant to section 4003(b)(1)-(3) of the CARES Act.  This is the “Mid-Sized Lending Program,” not the PPP.  Thus, borrowers can obtain both a PPP loan and a MSLP loan.
• There are three different loan facilities:
  • MSNLF:  Loan sizes from $250,000 to $35M and the loan cannot exceed 4X the borrower’s 2019 EBITDA when added together with existing and undrawn debt. The loan cannot be subordinate to existing debt of the borrower.  It is a 4-year facility, with principal and interest payments deferred for 1 year.  Interest is LIBOR+ 300 basis points.  The loan will have a 5 year term.  For more information on the terms, click here.
  • MSPLF: Loan sizes from $250,000 to $50M and the loan cannot exceed 6X the borrower’s 2019 EBITDA when added together with existing and undrawn debt.  The loan must be senior or pari passu with any other existing debt facilities and can be used to pay down existing facilities.  It is a 4-year facility, with principal and interest payments deferred for 1 year.  Interest is LIBOR+ 300 basis points.  For more information on the terms, click here.
  • MSELF: Borrowers can use this facility to refinance or upsize existing debt. This is a 4-year term loan ranging in sizes from $10 million to $300 million. The maximum loan amount cannot exceed (i) 35% of the Eligible Borrower’s existing outstanding and undrawn available debt or (ii) when added to the Eligible Borrower’s existing outstanding and undrawn available debt, 6X the Eligible Borrower’s adjusted 2019 EBITDA. The loan must be senior to or pari passu with existing debt facilities. Principal and interest payments are deferred for 1 year.  Interest is LIBOR+ 300 basis points.  For more information on the terms, click here.

Reminder Section:  (what should I be doing):

• Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
• Talk to your payroll company about the qualified sick/family leave legislation (FFCRA, passed prior to the CAREs Act).
• Consider speaking with your bank to discuss changes to terms of existing debt facilities. The banking system remains strong.
• If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.