Federally-sponsored relief programs responding to COVID-19 provide businesses a path toward recovery, but managing loan applications and obligations can be a complex process that diverts attention from your business operations.
By reviewing your organization’s current debt capital and financial position, our professionals can help determine if the Main Street Lending Program (MSLP)—or other alternative financing options—are right for you, and support you in managing your debt capital effectively.
Enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the US Department of the Treasury’s MSLP facilitates lending to small- and medium-sized businesses, with the majority of eligible loans underwritten by the Federal Reserve Bank.
Borrowers can receive a minimum of $250,000 or up to $300 million depending on loan type.
Businesses with up to 15,000 employees or $5 billion in 2019 annual revenue are eligible to borrow through the program, which offers new loans, priority loans, and expanded loans. Below are the summary terms included with each loan program.
The MSLP provides key advantages to borrowers including:
Businesses could be eligible to borrow up to six times their earnings before interest, taxes, depreciation, and amortization (EBITDA) and can refinance their existing debt into one MSLP loan under the priority loan program.
It’s important to note restrictions are placed on shareholder distributions above and beyond regular tax distributions and on compensation increases for senior executives paid more than $425,000.
Banks will use the same underwriting standards used for other loan programs. While 2019 EBITDA is the program’s benchmark, banks will use 2020 EBITDA, in addition to other financial data points, as part of their underwriting criteria.
Loan financing is both a strategic and tactical decision, with many factors and commitments to be considered given your business’ goals, financial position, growth opportunities, and preparedness for financing discussions.
As your business works to procure loans or manage its debt, our professionals can provide:
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