COVID-19 - The Main Street Lending Program: Treasury Advises That Program Will Not Be Extended Past December 31

Friday, November 20, 2020

The Main Street Lending Program (“MSLP” or the “Program”) is a financial assistance program established by the Federal Reserve System to support small and medium-sized businesses affected by the COVID-19 pandemic. The Program authorizes eligible lenders to originate up to $600 billion in eligible loans. Please consult our previous Client Alerts for additional details on the Program terms previously announced. 

As of November 18, 2020, approximately $5.4 billion in loan participations have been purchased by the MSLP, which is less than 1% of the $600 billion authorized under the Program. The Program guidance states that the MSLP will cease purchasing loan participations on December 31, 2020, unless extended by the Federal Reserve. While it was previously unclear whether the December 31 deadline for the MSLP would be extended, it now appears that no such extension will be forthcoming.

On November 19th, U.S. Treasury Secretary Steven T. Mnuchin sent a letter to the Federal Reserve advising that the MSLP, along with certain other CARES Act funding programs, should not be extended past December 31, 2020 and requested that the Federal Reserve return to the Treasury the $455 billion in unused funds of the MSLP and other programs.

Accordingly, lenders seeking to utilize the Program are advised to act promptly, and to submit participation requests to the MSLP well in advance of the December 31 deadline.

The terms of the Loan Facilities are subject to further rulemaking and guidance from the Federal Reserve System and the Federal Reserve Bank of Boston. We will continue to monitor developments and provide additional details as they become available. In the meantime, please feel free to contact
us if you have any questions about the Program.