Publication
Comparison of the Main Street Lending Program and the Paycheck Protection Program
The Federal Reserve provided details of its Main Street Lending Program on April 9, 2020. The Main Street Lending Program may be an alternative for businesses that are unable to apply for Paycheck Protection Program loans due to ineligibility or otherwise. In addition, those who apply for Paycheck Protection Program loans may also apply for and receive loans through the Main Street Lending Program. The following chart highlights some of the key differences between the Paycheck Protection Program and the Main Street Lending Program.
| Program | Paycheck Protection Program | Main Street Lending Program |
| Eligibility | Applicants must have 500 or less employees (with certain exceptions) | Applicants must have no more than 10,000 employees or must have revenues of less than $2.5 billion |
| Form of Assistance | New loan | (a) New loan or (b) an upsized tranche of a loan made before April 8, 2020 |
| Loan Term | 2 years | 4 years |
| Loan Amount |
|
|
| Interest Rate | 1% | Interest rate = SOFR + 2.5% to 4% FED SOFR |
| Loan Fees | All fees paid by SBA to lender = 5%, 3% or 1% of loan amount, depending on loan size |
|
| Payment Deferral | Principal and interest payments deferred 6-12 months | Principal and interest payments deferred 12 months |
| Forgiveness | Up to 100% of principal forgivable | Loans arenot forgivable |
| Employment and Payroll Requirements | Direct correlation between (a) percentage of payroll and workers retained, and (b) loan forgiveness | Must commit to make reasonable efforts to maintain payroll and retain workers |
| Compensation Limitations | None |
|
| Stock Repurchase Limitations | None | Other than due to an existing contractual obligation, may not purchase exchange-listed securities of the borrower or a parent company until 1 year after the loan is repaid |
| Capital Distribution Limitations | None | May not pay dividends or make distributions until 1 year after the loan is repaid |
More guidance will be provided by the Federal Reserve in the coming days. Be sure to check the COVID-19 Resource Center for updates.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
