Help is on the way for businesses shut out of the SBA Paycheck Protection Program.
The Federal Reserve has announced a new $600 billion Main Street Lending Program that will provide relief for individual investors, and private equity and venture capital firms hurt by the COVID-19 pandemic.
The Main Street Lending Program will make a “significant difference for 40,000 middle market businesses that employ over 35 million workers,” said Treasury Secretary Steven Mnuchin.
Many private equity and venture capital-owned companies were excluded from the PPP due to the “affiliation rules,” which stated that, due to common ownership across companies, the employees in those businesses collectively put the companies over the 500-employee limit set for the PPP.
In addition, loans through the Main Street program must be repaid and are not forgivable like the PPP’s.
The Main Street Lending Program will offer loans to COVID-19 affected companies with employees less than 10,000 or less than $2.5 billion in revenue.
Loans will have a 4-year maturity with payments of principal and interest deferred for one year. It will be administered by eligible banks, which will require an application process much like the PPP.
Who is eligible
If your business was in good financial standing before the coronavirus you are eligible if you meet the following criteria:
- Have up to 10,000 employees or up to $2.5 billion in 2019 annual revenues
- Must be a business created or organized in the U.S. or under the laws of the United States, with significant operations in and a majority of its employees based in the U.S.
- Cannot be a debtor in a bankruptcy case
- Must have incurred losses as a result of COVID-19, including reduced demand, unbudgeted medical expenses and unavailability of credit
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