Due to the uncertainty related to the COVID-19 pandemic, the United States Federal Reserve established the Main Street Lending Program (“MSLP”) to support small and medium-sized businesses and non-profit organizations within the United States pursuant to the authority granted to it under the Coronavirus Aid, Relief, and Economic Security Act. The MSLP is designed to aid businesses and their employees during their current financial strain by offering financial credit. Eligible lenders may extend MSLP loans to eligible borrowers and sell a 95% participation in such loans to the Special Purpose Vehicle (“SPV”) established by the Department of the Treasury. Under current rules, the Main Street SPV will cease purchasing loan participations on December 31, 2020, unless the MSLP is otherwise extended.

In order to determine if a lender is eligible to participate in the MSLP, a lender should review the program term sheets and frequently asked questions available on the Federal Reserve Bank of Boston website. Generally, an eligible lender is a U.S. federally insured depository institution, a U.S. branch or agency of a foreign bank, a U.S. bank holding company, a U.S. savings and loan holding company, a U.S. intermediate holding company of a foreign banking organization, or a U.S. subsidiary of any of the foregoing (“Lender”).

Upon determining lender eligibility, the Lender should review the Lender Registration Certifications and Covenants and Lender Wire Instructions and register the institution using the lender portal. The institution’s chief executive officer and chief financial officer are both required to provide information in order to successfully complete registration. According to the Federal Reserve Bank of Boston website, full processing of a lender’s registration may take several business days.

Under the MSLP, Lenders may make loans to for-profit organizations and non-profit organizations. The MSLP offers three types of loan facilities to for-profit organizations and two types of loan facilities to non-profit organizations. Eligible borrowers may apply for MSLP loans by contacting a Lender directly.

Lenders are required to submit MSLP-specific documentation with each request to the SPV for participation, in addition to the completed loan documentation. While Lenders may fund MSLP loans prior to receiving a commitment from the SPV to purchase the loan, Lenders may also conduct a dry closing and wait to fund the loan until receiving a binding commitment letter from the SPV to purchase. It is important for Lenders to review the Frequently Asked Questions and other guidance published on the Federal Reserve Bank of Boston website to determine what provisions will be necessary to include in their loan documentation.

In the event a Lender closes a MSLP loan subject to receiving a commitment from the SPV to purchase, the Lender must submit all required documentation that has been completed and signed, including loan documentation through the lender portal. In the submission, the Lender should indicate that the loan has not been funded yet. Contingent upon the package being complete and adhering to the MSLP requirements, the SPV will provide the Lender with a binding Commitment Letter to purchase the loan after it has funded. The Commitment Letter will state the Lender must fund the loan within three business days from the date of the letter and provide notice to the SPV of the date the funding occurred through the lender portal.