Presented as one of the Fed’s fundamental initiatives to bring money to businesses and households in need, the Main Street program will now allow businesses with up to 15,000 employees and $ 5 billion in revenue to apply for a funding.
This is an increase from the previous limit of 10,000 workers and $ 2.5 billion in revenue for a program for medium-sized businesses whose activities have been hampered by social distancing efforts to limit the spread of the coronavirus. .
The Fed also offers a different set of loans. The changes divide loans into three categories: new, priority and expanded. New and priority loans have a minimum size of $ 500,000, but expanded loans amount to $ 10 million and more.
The maximum loan size varies: for new loans, the limit is either $ 25 million or four times adjusted profit before taxes, interest, amortization and amortization, whichever is less, while priority loans have a maximum of $ 25 million or six times EBITDA. Extended loans are limited to $ 200 million or 35% of undrawn or outstanding debt, six times EBITDA.
Loan terms are two to four years at LIBOR, the benchmark for day-to-day borrowing for banks, plus 3%.
The new loan option will now require banks to assume 15% of the loan, with the Fed assuming the rest. Existing loans involve a 5% interest for the banks.
An announcement from the Fed said the change was made after soliciting comments on the initial details of the program. Some 2,200 individuals, businesses and non-profit organizations sent responses, prompting the Fed to expand the program offerings as well as the size of the entities that would be eligible.