On June 8, 2020, the Federal Reserve Financial institution of Boston launched up to date Continuously Requested Questions (FAQs) and Time period Sheets with respect to the Primary Avenue Lending Program. Subsequently, on June 11, 2020, the Federal Reserve Financial institution of Boston launched corresponding updates to lots of the program’s paperwork. The Primary Avenue Lending Program will not be operational as but.
The updates broaden the scope of the Primary Avenue Lending Program by (i) decreasing the minimal mortgage quantities underneath the New Mortgage Facility and Precedence Mortgage Facility from $500,000 to $250,000, (ii) eradicating the 35% sizing take a look at from the Expanded Mortgage Facility, and (iii) growing the utmost mortgage quantities obtainable underneath every facility to $35 million for the New Mortgage Facility, $50 million for the Precedence Mortgage Facility and $300 million for the Expanded Mortgage Facility.
Different notable modifications are: (i) the SPV will now buy a 95% participation in Precedence Loans like the opposite services, (ii) maturity has been prolonged to five years as a substitute of Four years, (iii) principal funds are actually deferred for two years as a substitute of only one yr, (iv) an up to date fee amortization schedule has been supplied for the New Mortgage Facility, and (v) clarification has been supplied as to when an Eligible Borrower’s associates are taken into consideration for calculating mortgage sizing.
The up to date supplies can be found on the Federal Reserve Financial institution of Boston’s web site by clicking right here.
This bulletin briefly describes the important thing updates on the up to date Primary Avenue Lending Program supplies. Alongside this bulletin, we’ve got up to date our easy-to-digest chart setting forth the high-level phrases of the Primary Avenue Lending Program. We observe that that is present as of June 11, 2020 and changes to this system could also be made sooner or later.
Click on the picture beneath to view the chart in full.
KEY UPDATES TO MAIN STREET LENDING PROGRAM
1. Mortgage Sizing:
Minimal: Minimal mortgage sizes for the NLF and PLF are lowered from $500,000 to $250,000.
Most: Most mortgage sizes (and upsized tranche) for every facility are elevated: (i) from $25 million to $35 million underneath the NLF, (ii) from $25 million to $50 million underneath the PLF, and (iii) from $200 million to $300 million underneath the ELF.
35% Prong Underneath ELF: The 35% prong of the mortgage sizing take a look at underneath the ELF has been eliminated.
2. Monetary Statements: Pointers have been supplied as to the kinds of monetary statements that an Eligible Borrower is anticipated to undergo an Eligible Lender. The related inputs to the Eligible Borrower’s EBITDA calculation ought to come from these monetary statements.
3. Associates: If an Eligible Borrower is the one enterprise in its affiliated group that has sought funding by means of Primary Avenue, its affiliated group’s debt and EBITDA should not related to figuring out whether or not that enterprise can qualify, besides to the extent that the Borrower’s subsidiaries are consolidated into its monetary statements. If the Eligible Borrower has an affiliate that has beforehand borrowed or has an utility pending to borrow from a Primary Avenue facility, then the complete affiliated group’s debt and EBITDA are related to figuring out the Eligible Borrower’s most mortgage measurement.
4. Funds: Maturity has been prolonged to five years, funds of principal are actually deferred for two years (though curiosity funds are nonetheless solely deferred for 1 yr), and the amortization schedule underneath the NLF has been up to date to be in step with the PLF and ELF.
5. SPV Precedence Mortgage Participation: The SPV will now buy 95% participations in Precedence Loans like the opposite services (a rise from 85%).
6. Consent Charges underneath ELF: Eligible Lenders could now cost customary consent charges if needed when amending a credit score facility so as to add an upsized tranche underneath the ELF.
7. Nonprofits: Whereas the Primary Avenue Lending Program will not be at present obtainable to nonprofits, the Fed introduced that it’s working to determine mortgage applications appropriate for nonprofits.