Banking and Business Monthly – July 2020
Steven A. Migala • July 30, 2020
UPDATED FEDERAL RESERVE FAQs PROVIDE ADDITIONAL GUIDANCE REGARDING ITS MAIN STREET LENDING PROGRAM
| Main Street Lending Program Loan Options | MSNLF | MSNLF | MSELF |
|---|---|---|---|
| Term | 5 years | 5 years | 5 years |
| Minimum Loan Size | $250,000 | $250,000 | $10,000,000 |
| Maximum Loan Size | Lesser of $35 million or an amount that, when added to outstanding and undrawn available debt, does not exceed 4.0x adjusted 2019 EBITDA | Lesser of $50 million or an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA | Lesser of $300 million or an amount that, when added to outstanding and undrawn available debt, does not exceed 6.0x adjusted 2019 EBITDA |
| Risk Retention | 5% | 5% | 5% |
| Interest Deferral | 1 year with capitalization of unpaid interest permitted | 1 year with capitalization of unpaid interest permitted | 1 year with capitalization of unpaid interest permitted |
| Principal Amortization Schedule (Deferral for First Two Years) | Years 3-5: 15%, 15%, 70% | Years 3-5: 15%, 15%, 70% | Years 3-5: 15%, 15%, 70% |
| Interest Rate | LIBOR (1 or 3 month) + 3%; no LIBOR floor | LIBOR (1 or 3 month) + 3%; no LIBOR floor | LIBOR (1 or 3 month) + 3%; no LIBOR floor |
| Collateral | Unsecured or secured | Must be secured if there is any other secured loans other than mortgage debt | The MSELF upsized tranche must be secured if the borrower has any other secured loans, other than mortgage debt that does not secure any other tranche of the underlying credit facility. The MSELF upsized tranche must be secured by the collateral (including, if applicable, any mortgage debt) securing any other tranche of the underlying credit facility on a pari passu basis. |
| Priority | Cannot be contractually subordinated | If the loan is secured by the same collateral as any of the borrower’s other loans (other than mortgage debt), the lien upon such collateral must be senior to or pari passu with, the liens of the other creditors upon such collateral. Cannot be contractually subordinated. | The upsized tranche must be senior to or equal with, in terms of priority and security, the borrower’s other loans, other than mortgage debt. |
Highlights of the FAQs include:
- The prohibition against using MSPLF loan proceeds to refinance existing debt that is outstanding and owed to the eligible lender that originates the MSPLF loan extends to the originating lender’s affiliates as well.
- The definition of “mortgage debt” refers to debt that is solely secured by real property.
- The reference to ineligible businesses was updated to incorporate the SBA’s recently amended Interim Final Rules.
- Sole proprietorships are expressly excluded as eligible borrowers.
- Eligible lenders may charge certain customary fees to eligible borrowers at the time of origination and include such fees in the principal amount of the loan, provided that the total loan amount, including such fees, may not exceed the maximum loan size permitted for the eligible borrower under the relevant Program facility.
- Eligible lenders are not allowed to include a London Inter-bank Offered Rate (LIBOR) floor in the interest rate on a Program loan.
- If an otherwise eligible borrower was established before March 13, 2020, but does not have a financial history sufficient to establish that it was in sound financial condition before the onset of the pandemic (i.e., using an adjusted 2019 EBITDA that covers at least part of the calendar year 2019), it will not qualify for a Main Street loan unless such entities have clear predecessors or subsidiaries that can be referenced to calculate adjusted 2019 EBITDA.
- After the first year of the loan, an eligible lender may require the payment of interest at the frequency it would ordinarily require payment with respect to loans made to similarly situated borrowers (e.g., quarterly or annually).
If you have any questions about the Program, please contact me at
smigala@lavellelaw.com or
847-705-7555.
More News & Resources
Lavelle Law News and Events
While Illinois law recognizes that grandparents can play a vital role in a child’s life, it also strongly defers to the rights of parents. A grandparent seeking visitation must overcome a high legal threshold and demonstrate that denial of contact would likely harm the child’s well-being.
The 2025 Lavelle Law Charities Food Drive wrapped up excitingly on October 24, 2025! After weeks of heartfelt community giving, Lavelle Law team members personally delivered an enormous haul to the Schaumburg Township Food Pantry.
Impact of Partial Government Shutdown on IRS – Day 41: Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers must continue to meet their tax obligations as normal.
$65 Million Sale of Business – a Lavelle Law Success Story. We were able to effectively negotiate the terms of a complex sale in a manner that enabled both buyer and seller to achieve their objectives.
Explore the nuts and bolts of condominium law and gain actionable strategies to navigate today’s condominium and HOA challenges in Illinois.
The Illinois General Assembly enacted Public Act 1738, amending several provisions of the Illinois Code of Civil Procedure to raise debtor exemption limits effective 1.1.26. The new law provides expanded protection for residents, marking the most significant increase to the state’s exemption statutes in over a decade.
A crucial estate planning tool that many people in Illinois overlook is putting their home in a trust. Placing your house in a revocable trust offers multiple benefits. It avoids probate, which can save your family time and money after your death.
In response to Executive Order 14247 requiring the Internal Revenue Service to eliminate the use of physical checks, the U.S. Department of the Treasury announced that paper tax refund checks for individual taxpayers will be phased out.
The 2025 Lavelle Law Charities Food Drive benefiting the Schaumburg Township Food Pantry has begun! Join us in our efforts to bring food, dignity, and hope to residents in need who rely on the food pantry. The need is greater than ever this year, as the food pantry serves over 1,300 households each month!
Our experienced family law attorneys, Joe Olszowka, Annette Corrigan, and Kristina Buchthal Alkass, discussed three key areas of family law matters: prenuptial/postnuptial agreements, collaborative divorce, and child custody. This video is a recording of their presentation on September 17, 2025.
