Pub. 10 2020-2021 Issue 1

6 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S www.coloradobankers.org Main Street Lending Program A s a result of the Coronavirus Aid, Relief & Economic Security (CARES) Act, the Federal Reserve has created the Main Street Lending Program (“Main Street” or “Program”) to provide up to $600 billion in financing for small andmedium-sized businesses. The Programwill operate three facilities: the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and theMain Street Expanded Loan Facility (MSELF). OnMay 27, the Federal Reserve Bank of Boston (FRB Boston), which is administering the Program on behalf of the Federal Reserve, released borrower and lender documents along with updated term sheets for each facility and a revised FAQ document for the Program. Please check the website of the FRB Boston for Program documents and FAQs. Main Street is expected to launch any day now. 1. Structure of the Program Main Street is not a direct loan program from the Federal Reserve or the U.S. government, and loans under the Programwill not be forgiven. Instead, the FRB Boston has set up a special purpose vehicle (SPV), funded in part by the U.S. Treasury, to purchase participations in loans originated by Eligible Lenders. An Eligible Borrower (described below) may obtain a qualifying loan from an Eligible Lender (described below), and the SPV will purchase a participation interest in the qualifying loan at par from the Eligible Lender. The participation by the SPV will be 95% in the case of the MSNLF and the MSELF, and 85% in the case of the MSPLF. The Eligible Lender that advances a loan under the Program is required to retain the remaining portion of the loan and the related risk (pro rata with the SPV’s participation interest) until the loan made under the Programmatures or until neither the SPV nor a governmental assignee holds an interest in the loan, whichever comes first. 2. Who can make loans under the Program? Generally, U.S. banks, savings associations, credit unions, and holding companies, including U.S. branches or subsidiaries of foreign banking organizations, can make loans under the Program. Nonbank financial institutions are not Eligible Lenders at this time, but the Federal Reserve may expand eligibility to them in the future. Each Eligible Lender will use its own loan documentation, which should be substantially similar to the loan documentation it uses in the ordinary course of business, adjusted only as required by the Program. The Appendixes to the FAQ contain information on what must be included in the loan documentation. 3. Who can borrow under the Program? The Program sets forth certain minimum criteria to be eligible to borrow under the Program. Each Eligible Lender will then apply its own underwriting standards to evaluate the financial condition of each business. Below is a list of some of the criteria to be an Eligible Borrower under the Program. • The business was established prior to March 13, 2020. • The business was created or organized in the U.S. (or under the laws of the U.S.) and has significant operations in, and a majority of its employees based in, the U.S. • Thebusiness isa for-profitorganization. Non-profits may be eligible in the future but are not currently eligible. • The business, together with its affiliates, only participates in one of the Main Street facilities and does not participate in the Primary Market Corporate Credit Facility (PMCCF).  Note: Businesses that received support through the SBA Paycheck Protection Program (PPP) are eligible to receive a Main Street loan. • The business has not received specific support pursuant to the Coronavirus Economic Stabilization act of 2020 (Subtitle A of Title IV of the CARES Act). • The business is not an “Ineligible Business” according to Small Business Administration (SBA) regulations. • The business meets at least one of the following two conditions: (a) has no more than 15,000 employees or (b) has 2019 annual revenues of no more than $5 billion.  The number of employees should be determined following the framework set forth in the SBA’s regulation at 13 CFR 121.106. The business will need to calculate the average total number of persons employed for each pay period over FEATURE ARTICLE