This week, BPI filed two comment letters (see here and here) with the Federal Reserve in response to the agency’s request for comment on the upcoming release of the final term sheets for the Main Street Lending Facilities (Main Street New Loan Facility (MSNLF) and Main Street Expanded Loan Facility(MSELF)). BPI recognizes and supports the enormous potential of these facilities to provide significant and rapid relief to many small and medium-sized enterprises and their employees. In an effort to ensure the facilities are as efficient and successful as possible, BPI stressed the need for the facility to allow participation by borrowers that use a wide range of debt structures as opposed to those who just use term funding, and that the terms of the facilities try to work within existing market conventions to the largest extent possible. BPI also stressed the importance of making borrowers aware that the MSNLF and the MSELF are both loan facilities that require underwriting by the banks in order to best manage risk and protect the taxpayer. That means banks will need to be able to use their existing credit processes to process borrower applications most efficiently.
BPI further offered suggestions to the Fed with regard to the need for flexibility around some of the loan features such as EBITDA calculations, maturity and lending into syndicated facilities. It also stressed the need for lenders to retain their respective regulatory capital categories in order to maximize lending ability, allowing for participation in the program U.S. branches of foreign banking institutions and agency guidance clarifying the proper incorporation of these loans into risk-based capital and leverage ratio calculations. BPI’s members stand ready to support the U.S. economy in the implementation of these facilities and offered the comments in an effort to fully optimize their implementation.
