November 3, 2020

Caity Roach
Contributing Editor

Hot Topic Tuesday — Federal Reserve Adjusts Terms of Main Street Lending Program

On Friday,  the Federal Reserve announced that it would be adjusting the terms of its Main Street Lending Program (MSLP) in an attempt to bolster support for small businesses affected by the coronavirus pandemic and increase lender participation. In addition to reducing the minimum loan size from $250,000 to $100,000, the Fed also changed the fee structure so that lenders will get paid more for facilitating loans under $250,000.

Prior to this adjustment, fees for originating MSLP loans were strictly proportional to the loan’s size, which discouraged lenders from focusing on issuing smaller-sized loans to Main Street businesses. Now, if the initial principal amount of the MSLP loan is less than $250,000, the borrower will pay their lender an origination fee of up to 200 basis points of the principal amount of the loan at the time of its origination.

These changes to the MSLP follow months of talks between Congress and the White House that have ultimately failed to deliver more fiscal stimulus for small businesses. As a last-ditch effort, Congress has turned its focus to the MSLP.

“This is a major victory in our push to give small businesses the tools they need to get through the pandemic,” says Donna Shalala, a congresswoman from Florida and member of the CARES Act Congressional Oversight Commission. “This is a great first step, but there’s definitely more work to be done.”

In the coming months, Congress anticipates working with the federal reserve to further increase the pool of eligible MSLP borrowers and make the program more accessible to struggling small businesses.


Federal Reserve

Main Street New Loan Facility Term Sheet (PDF)

Main Street Priority Loan Facility Term Sheet (PDF)

Main Street Expanded Loan Facility Term Sheet (PDF)

Nonprofit Organization New Loan Facility Term Sheet (PDF)

Nonprofit Organization Expanded Loan Facility Term Sheet (PDF)

FAQ: Do PPP loans count as “outstanding debt” for purposes of Main Street? (PDF)

Statement – Donna Shalala