Updates Made to Three Main Street Loan Facilities from the Federal Reserve

Hannah E. Mudd

By Hannah E. Mudd



The Federal Reserve Board recently adjusted the terms of the Main Street Lending Program (MSLP) in an effort to focus their support on smaller businesses who continue to suffer due to the pandemic. The minimum loan size for the Main Street New Loan Facility (MSNLF), Main Street Priority Loan Facility (MSPLF), and Nonprofit Organization New Loans Facility (NONLF) have been reduced from $250,000 to $100,000. The fees on these three facilities have also been adjusted to encourage business owners to apply for these loans.

New Fee Amounts for the MSNLF, MSPLF, and NONLF

  • Transaction Fees: If the initial principal amount of the Eligible Loan is $250,000 or greater, an Eligible Lender will pay the Special Purpose Vehicle (SPV) a transaction fee of 100 basis points of the principal amount at the time of origination. Eligible Lenders may require Eligible Borrowers to pay this fee. No fee will be imposed if the initial principal amount is less than $250,000.
  • Origination Fees: If the initial principal amount of the loan is $250,000 or greater, an Eligible Borrower will pay an Eligible Lender an origination fee of up to 100 basis points of the principal amount at the time of origination. If the initial principal amount is less than $250,000, the origination fee will be up to 200 basis points of the principal amount at the time of origination.
  • Servicing Fees: If the initial principal amount of the loan is $250,000 or greater, the SPV will pay Eligible Lenders 25 basis points of the principal amount of its participation in the Eligible Loan per annum. If the initial principal amount is less than $250,000 the SPV will pay 50 basis points of the principal amount of its participation in the loan per annum.

PPP Loan Considerations Continue reading »

Temporary Residential Eviction Moratorium Order from the CDC and HHS Announced

Hannah E. Mudd

By Hannah E. Mudd



The Centers for Disease Control and Prevention (CDC) and Department of Health and Human Services (HHS) issued an Agency Order effective September 4, 2020 announcing a temporary moratorium on residential evictions in attempts to limit the spread of COVID-19. The agency order was issued shortly after the White House announced an order barring evictions for renters would likely be issued as negotiations in Congress for renewal of CARES Act provisions have stalled.

The order is effective through December 31, 2020 and goes further than previous moratorium measures outlined in the CARES Act based on the number of citizens who could seek help if circumstances so require. In support of this measure, the CDC and HHS cited that eviction moratorium-like measures enable members of the public to have shelter in which to quarantine, isolate, and practice social distancing resulting in an effective and beneficial public health measure to prevent the rampant spread of COVID-19.

Under the order, a landlord, owner of residential property, or ‘other person’ with legal rights to pursue evictions or a possessory action (“landlord”) is not permitted to evict a ‘covered person’ (“tenant”) from a residential property[1] until the order expires at the end of the year. Therefore, almost any person or entity who leases a residential property to another must comply with the order. (Note: ‘Covered person’ includes any tenant, lessee, or resident of residential property. ‘Other person’ includes corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.) Continue reading »

August 2020 Federal and State Extensions of Foreclosures and Eviction Moratoriums

Hannah E. Mudd

By Hannah E. Mudd



The Federal Housing Administration (“FHA”) announced another extension of its foreclosure and eviction moratorium through December 31, 2020 for homeowners with an FHA-insured single-family mortgage covered under the CARES Act.

This extension means the FHA has now provided more than nine months of foreclosure and eviction relief to FHA-insured homeowners. As this is a continuation of the moratorium put in place in March of this year, the protections continue to apply to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (“reverse”) mortgages.

As a refresher, the moratorium requires mortgage servicers to:

  1. Halt all new foreclosure actions and suspend all foreclosure actions currently in process for FHA-insured single-family properties, excluding legally vacant or abandoned properties; and
  2. Cease all evictions of persons from FHA-insured single-family properties, excluding actions to evict occupants of legally vacant or abandoned properties.

According to HUD, “homeowners with FHA-insured mortgages should continue to make their mortgage payments during the foreclosure and eviction moratorium if they are able to do so, or seek mortgage payment forbearance pursuant to the CARES Act from their mortgage servicer, if needed.”

Under the CARES Act: Continue reading »

Guidance Released on Deferring Employee Social Security Taxes

Hannah E. Mudd

By Hannah E. Mudd



The IRS released guidance for employers regarding President Trump’s August 8, 2020 memorandum on withholding, deposit, and payment of employee Social Security taxes for the period of September 1, 2020 through December 31, 2020. Secretary of the Treasury Steven Mnuchin has since confirmed the deferral as voluntary and that employers may choose to continue to withhold and deposit employee Social Security taxes under the normal schedule.

The guidance clarifies that employees eligible for deferral are those with wages (for FICA purposes) of less than $4,000 per bi-weekly pay period or an equivalent amount for other pay periods. The deferral of eligibility determination must be made on a payroll-by-payroll basis. Any compensation not considered wages for FICA purposes does not count when making the determination of eligibility. It is also important to remember that ‘wages’ considered are not based on gross pay but are based on the amount of wages after nontaxable deductions. Continue reading »

Deadline Extended for Main Street Lending Program Loans

Hannah E. Mudd

By Hannah E. Mudd



The Federal Reserve’s Main Street Lending Program (MSLP) recently expanded to include two new loans specifically for nonprofit organizations. In addition to this further explanation, all the loan facilities offered under MSLP received a deadline extension.

Now all five facilities will see the SPV cease making purchases of participations in Eligible Loans after December 31, 2020. Of course, this is subject to change should the Federal Reserve and Department of the Treasury decide it is necessary to extend the facilities.

All our blog posts on this topic have been updated (see below) and term sheets and forms are available at Continue reading »

Loan Relief for Nonprofit Organizations Through the Main Street Lending Program Expansion

Hannah E. Mudd

By Hannah E. Mudd



UPDATED 11/9/2020

The Federal Reserve’s Main Street Lending Program (MSLP) has expanded to include two new loans specifically for nonprofit organizations: The Nonprofit Organization New Loan Facility (“NONLF”) and the Nonprofit Organization Expanded Loan Facility (“NOELF”). Nonprofit organizations will now be able to receive support from relief efforts similar to those available to for-profit entities. Many of the basic eligibility, certification, and fees track those already in place for for-profit counterparts.

How the Program Will Operate:nonlf loan noelf loan

  • Nonprofit organizations can access the Loan Participation Agreement form, borrower and lender certifications and covenants, and other required form agreements on the Federal Reserve Bank of Boston’s Main Street Lending Program Forms and Agreements website.
  • Lenders are encouraged to begin making loans immediately upon successful registration.
  • The NONLF and NOELF Special Purpose Vehicle (SPV) will purchase 95% of each eligible loan submitted if the required documentation is complete and transactions meet the relevant program facility’s requirements.

Program Definitions NONLF and NOELF Loans:

  • Eligible Lenders – The same eligible lenders provided for for-profit MSLP facilities.
  • Eligible Borrowers – Eligible Borrowers are nonprofit organizations:
    • Created or organized in the U.S. or under the laws of the U.S. with significant operations in the U.S. and a majority of its employees are based in the U.S.;
    • In continuous operation since January 1, 2015;
    • That are not an ineligible business[i];
    • With fewer than 15,000 employees or $5 billion or less in 2019 annual revenues;
    • With a minimum of 10 employees;
    • With an endowment under $3 billion;
    • With total non-donation revenues of at least 60% of expenses from 2017-2019[ii];
    • With a ratio of adjusted 2019 earnings of at least 2% before interest, depreciation, and amortization (EBIDA) to unrestricted 2019 operating revenue[iii];
    • With a ratio of at least 60 days of liquid assets[iv] at the time of loan origination to average daily expenses over the previous year;
    • With, at the time of origination, a ratio greater than 55% of unrestricted cash and investments to existing outstanding and undrawn available debt, plus the amount of any under the Facility, plus the amount of any CMS Accelerated and Advance Payments;
    • That are not a participant in another MSLP facility or the Primary Market Corporate Credit Facility; and
    • Have not received specific support under the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act).

Continue reading »

Missouri Offers Additional COVID-19 Relief Grants for Small Business and Family-Owned Farms

Hannah E. Mudd

By Hannah E. Mudd



The Missouri Department of Economic Development (DED) has provided guidance on how to apply for the Small Business Grant Program as added by the CARES Act and House Bill 2007. The grants seek to provide support to small businesses and family-owned farms by reimbursing the costs of business interruptions caused by required COVID-19 closures.

DED kicked off the grant program by focusing on hardest hit industries: retail trade, accommodation, food service, health care, and family-owned farms. Applications for these industries are being accepted until August 31, 2020. Businesses in other industries may apply on or after September 1, 2020 if funds are still available.

While all a business or farm’s expenses may not be covered, or total reimbursement may not be possible, depending on funding available, the grant program provides another excellent option for COVID-19-related relief.

Program Basics:

The Missouri grant program is statewide with the total funds available set at $30 million, Of this, $7.5 million is specifically available for family-owned farms and family farm corporations.[i] Each applicant may only file one grant application. Hopeful applicants must incur, or have incurred, COVID-related costs between March 1, 2020 – November 15, 2020. Continue reading »

What Business Owners Need to Know About the Main Street Lending Program Expansion

Hannah E. Mudd

By Hannah E. Mudd



UPDATED 11/9/2020

The Main Street Lending Program (MSLP) from the Federal Reserve has been expanded. With the expansion, more small and medium-sized businesses can receive support. (Click here for details on the original MSLP program requirements.)

mslp loan

Let’s take a look at what is included in the expansion of the MLSP from modified definitions and program requirements to the new third facility called the Main Street Priority Loan Facility. (The Federal Reserve is currently working to establish a program for nonprofit organizations, but such a program is not yet available.)

Under the newly expanded MSLP, the minimum loan amount is lowered, the maximum loan amount is increased, the principal repayment schedule and loan term are extended, and the Federal Reserve’s participation increased to 95% for all loans. The expanded MSLP is now open for lender registration and the Federal Reserve will be actively buying loans soon.

How the Expansion Program Will Operate:

Continue reading »

What You Need to Know About Your PPP Loan

Hannah E. Mudd

By Hannah E. Mudd



As you are aware, the Paycheck Protection Program (“PPP”) was developed as a relief measure under the CARES Act. Unsurprisingly, the initial round of PPP funding was  fully claimed by businesses across the country. Congress passed a bill providing additional funding for PPP loans. If you previously applied for either loan, you may not need to re-apply. For more information, click here.

If you are one of the fortunate businesses to secure funding, you may be wondering – now what? Whether it be how you may use those funds or ensuring you receive maximum loan forgiveness, here’s what you need to know for your business.

Fortunately, the SBA anticipated these questions and provided some clarifying guidance for business owners. One of the most important clarifications is that no more than 25% of a PPP loan can be used for non-payroll costs if the business wants to be eligible for complete loan forgiveness. They also clarified that any interest which accrues before the loan is officially forgiven or paid in full must be repaid at the borrower’s expense. Additionally, full forgiveness will not be available if you reduce the number of full-time equivalent employees (“FTE”s) during the 8-week loan period or reduce the pay of an employee making less than $100,000 by more than 25%.

The SBA also clarified that your lender will be the one to actually determine the amount of the loan that is deemed forgivable and will have 60 days to approve or deny the forgiveness once they receive your business’ request and relevant documentation. What exactly will be required by your particular lender to demonstrate proper usage of loan proceeds and ensure maximum loan forgiveness is still unclear.

What to Track and Monitor for PPP Loan Forgiveness

We recommend creating a method to track, record, and document anything at all PPP or expense-related for the next several months.

Additionally, the following are several things to specifically monitor and keep inside this ‘file’ that will make your request for forgiveness much easier and streamlined.

1. Implications from other CARES Act Provisions. Depending on your business’ situation, you may have qualified for, and received, alternative relief under another provision of the CARES Act. You will want to evaluate the timing implications these alternatives may have on your PPP loan forgiveness before using any of the funds. Continue reading »

Federal Reserve Offers Lending Program for Small and Medium-Size Businesses

Hannah E. Mudd

By Hannah E. Mudd



UPDATED 11/9/2020

The Federal Reserve announced on April 9, 2020 that it has established a $600 billion lending program focused on aiding small and medium-size businesses who were in good financial standing prior to the onset of the COVID-19 crisis. This program will enable the purchase of qualifying loans from lenders lending to U.S. businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. Additionally, it looks like firms who have taken advantage of the SBA Paycheck Protection Program will be eligible to participate in this program as well.

The Federal Reserve’s Main Street Lending Program will operate through two facilities: the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF). Eligible lenders may originate new loans (under MSNLF) or increase the size of (“upsize”) existing loan/tranches (under MSELF) made to eligible businesses. The program is not operational at this time, but the comment period just closed on April 16, 2020. Accordingly, we can expect the program to start and have an application available soon.

The MSNLF will purchase participations in eligible loans originated by lenders on or after April 8, 2020. The MSELF will purchase upsized tranches or loans originated by lenders before April 8, 2020 that meet specific eligibility criteria. In either case, the purchases will be on a risk-shared basis with the lender retaining 5% of the loans and the relevant facility purchasing 95% participation in the loans originated by eligible lenders. This 95% purchased participation will be through a single special purpose vehicle on a recourse basis as set up by a Reserve Bank branch.

We will first discuss the borrower, lender, asset, and entity eligibility requirements that are the same across both facilities before delving into the facility-specific issues.

Common Requirements

Eligible lenders include U.S. insured depository institutions, U.S. bank holding companies, and U.S. savings and loan holding companies (“lenders”). While eligible borrowers are businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. Borrowers must be a business created or organized in the United States or under the laws of the United States with significant operations in, and most of its employees based in, the United States. Borrowers who participate in program may not also participate the Primary Market Corporate Credit Facility as established by the Federal Reserve.

Eligible loans are unsecured term loans made by a lender(s) to a borrower that has: Continue reading »