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The Ins and Outs of the Main Street Lending Program
Episode 16th July 2020 • Yield Maintenance • McGuireWoods
00:00:00 00:43:39

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As businesses begin resuming operations, the debt industry is receiving increased attention, with entities seeking liquidity and financial needs due to COVID-19. Apart from private financing and nontraditional lending, the Federal government is also rolling out programs to stabilize and boost enterprise. If you’re a business looking for additional capital or a lender interested in the trends in the industry, this podcast is for you.

In this inaugural episode of Yield Maintenance, host Brian Coughlan is joined by Clayton Stallbaumer, a McGuireWoods debt finance partner in the Chicago office, to discuss the Main Street Lending Program (MSLP). This new debt-focused stimulus from the Federal Reserve is an emergency credit lending program for businesses that were in sound financial condition before the pandemic struck.

Clayton goes into detail on what the program is, how it operates, the role of the Fed and eligible lenders, and the different facilities that are offered under the program. Clayton and Brian also explore possible issues and risks and the current interest from lenders and borrowers. Because the lenders are expected to do their own underwriting and use their own loan documents (other than certain form documents issued by the Fed), documentation will vary and industry-wide consensus is unlikely. Additionally, the restrictions on the borrower side may make the program less appealing than it initially appeared to be, particularly for private equity-backed businesses.

The MSLP went live on July 6, 2020 (after this episode was recorded), and it is and will continue to be a notable talking point among different stakeholders in the industry. Whether you’re a borrower or lender, now is the perfect time to initiate conversations with your contacts about the MSLP and the types of credit and loans that are available.


Episode highlights

Overview of the MSLP(1:57)

When the MLSP will go live (8:35)

Demand on the lender and borrower side (13:39)

Lender capability to provide desired MSLP loans (19:24)

Types of amendments and documentation (22:38)

Effect of MSLP on direct lenders (26:26)

Risk to direct lenders (31:18)

Possible lender issues (35:08)

Inter lender dynamic (39:19)

Final insight on the MSLP (40:12)

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