Main Street Lending Program
Authorized via the CARES Act, the Federal Reserve Bank of Boston is administering the Main Street Lending Program (MSLP) in an effort to provide support to small and medium-sized businesses during the COVID-19 pandemic crisis. The purpose of the MSLP is to support those businesses that were unable to access PPP or need additional support after receiving a PPP loan. The MSLP loans are full recourse and non-forgivable.The Department of the Treasury will make a $75 billion equity investment in a Special Purpose Vehicle (SPV) to purchase participations of MSLP loans. The SPV will cease purchasing participations on September 30, 2020, unless the MSLP is extended by the Federal Reserve Board and the Treasury Department.
You may submit additional questions via the Ask a Question form on this page by selecting "Main Street Lending Program".
Question: For an Eligible Lender that is a Texas state-chartered bank, do lending limits apply to the entire size of a MSLP loan, or only the percentage of a loan that is retained by the Eligible Lender?
Loans made under the MSLP apply towards the bank’s lending limit.When operational, Eligible Lenders will have two options for funding loans under the Program: (1) Funded Loan, or (2) Condition of Funding. Refer to the Federal Reserve Bank of Boston’s Main Street Lending Program Frequently Asked Questions for more information on the two types of funding.
For lending limit purposes, MSLP loans should be treated as follows:
Funded Loan: If the Eligible Lender funded an MSNLF Loan, an MSPLF Loan, or an MSELF Upsized Tranche to an Eligible Borrower before seeking to sell a participation to the Main Street SPV, the full amount of the loan would be treated as a loan by the Eligible Lender to the relevant Eligible Borrower and would count towards the Eligible Lender’s lending limit. The full amount of the loan will count towards the Eligible Lender’s lending limit until such time as the Main Street SPV has purchased the participation (i.e., once the Eligible Lender has received full payment by the Main Street SPV for the participation). After the purchase of the participation by the Main Street SPV, the portion of the loan that has been sold as a participation to the Main Street SPV would no longer be treated as a loan to the relevant Eligible Borrower for purposes of the Department’s lending limit regulations.
Condition of Funding: Under the Program, the Eligible Lender has the option of entering into a loan agreement to extend an MSNLF Loan, an MSPLF Loan, or an MSELF Upsized Tranche to an Eligible Borrower, for which the funding of such loan is contingent on the Eligible Lender receiving a binding commitment from the Main Street SPV to purchase a participation in the loan.
Pursuant to 7 Texas Administrative Code § 12.3(b)(3)(B), if the Eligible Lender funds the entire loan and provides a Funding Notice to the Main Street SPV by the specified deadline on the day of funding, whereby the Main Street SPV is obligated to fund its purchased portion by the end of the Next Business Day, the Eligible Lender need only include the retained percentage of the loan when calculating its lending limit to the Eligible Borrower.
In instances where funding from the Main Street SPV occurs more than one business day after the loan is funded by the Eligible Lender, provided such delays were outside of the Eligible Lender’s control, the entirety of the loan will be treated as a loan to the relevant Eligible Borrower and count towards the Eligible Lender’s lending limit. Pursuant to his authority under Texas Finance Code § 37.008(a)(3), the Banking Commissioner has determined that any amount of the loan exceeding the Eligible Lender’s lending limit will not be considered a violation and will instead be treated as nonconforming for the interim period. Once the Eligible Borrower receives full payment from Main Street SPV for the portion of the loan that has been sold as a participation to the Main Street SPV, that portion of the loan will no longer be treated as a loan to the relevant Eligible Borrower for purposes of the Department’s lending limit regulations.