The Next Batch of Acronyms in the World of Finance/COVID-19-Related Lending Programs
Most of us are used to seeing PPP for Payroll Protection Program in every COVID-19 finance article, but soon we will need to learn some new acronyms: MSNLF, MSPLF and MSELF. These are the 3 new lending programs under the Federal Reserve’s Main Street Loan Facility.
While the program was announced a few weeks ago, it had not received much attention since the entire banking and finance world was so focused on PPP applications and funding. On April 30, the Fed announced expansion of the program which will make it a hot topic in the coming weeks. Few are expecting the impacts of COVID-19 to be gone when the PPP money is all spent, so organizations will need additional sources of funding.
While many of the details need to be worked out and not all programs will be available to all borrowers based on credit worthiness, here is what we know now:
1) All programs:
- 4 year maturity
- LIBOR pls 300 bp
- Deferral of principal and interest for one year
- Can coexist with PPP loans
2) Main Street New Loan Facility (MSNLF):
- New credit facility
- Loan amounts ranging from $500,000 to $25 million
- Total Debt to 2019 EBITDA cannot exceed 4X
- Superior to all existing debt
3) Main Street Priority Loan Facility (MSPLF):
- New credit facility
- Loan amounts ranging from $500,000 to $25 million
- Total Debt to 2019 EBITDA cannot exceed 6X
- Superior or pari passu with existing debt
- Can be used to refinance existing debt
4) Main Street Expanded Loan Facility (MSELF):
- Upsizing existing credit facilities
- Loan amounts from $10 million to $200 million
- Total Debt to 2019 EBITDA cannot exceed 6X
- Superior or pari passu with existing debt
Expect more information in the coming weeks as banks complete their PPP work.
About the Author
Doug Jones provides fractional CFO and senior financial management services to small and midsize organizations. In addition to improving his clients’ accounting and finance operations, Doug frequently serves as the link between company owners and outside advisors including attorneys, CPAs, investment bankers, appraisers, and personal financial advisors. He is skilled in identifying and integrating the full range of financial and non-financial business issues in contract negotiations and resolution of business decisions.