The MSLP aims to be a lifeline for businesses that may have been too big to participate in the PPP, but too small to access corporate lending facilities. Under the original terms, the Fed set the minimum loan amount at $500,000 and the maximum amount at $200 million.
To help increase participation, the Fed has lowered the minimum loan size to $250,000 and raised the maximum loan size to $300 million.
Among the criticisms the program has received, many have argued that the program’s interest rates were too high, while its repayment periods were too short. The Fed has extended the maturity of each loan option from four years to five years, as well as extended the repayment period for all loan options by delaying principal payments for two years instead of one. However, the interest rates remain the same at LIBOR plus 3%.
The latest changes also include an increase in participation from the Fed, which will free up more capital for lenders to make additional loans and reduce their risk tied to the program. Now, the Reserve Bank will purchase 95% of the loan – up from 85% – leaving a bank with 5% of the loan on its books, so long as the transactions are consistent with the facility’s requirements. The Independent Community Bankers of America (ICBA) was among groups that had requested increased participation rates from the Fed.
As of June 15, 2020, lenders interested in participating in the MSNLF, MSELF, or MSPLF can begin registering their institution using the lender portal. After submitting the lender registration via the lender portal, the Fed will review the application, which is expected to take several business days. For more information, lenders can contact email@example.com or visit the Fed's MSLP overview page. The SPV will stop purchasing loan participations Sept. 30 unless the Fed and the Treasury Department, which pledged $75 billion in equity to the Main Street Lending Program, extend the program.