On May 5, BPI filed a comment letter with the Board of Governors of the Federal Reserve System presenting five recommendations to the updated term sheets for the Main Street Lending Program. The letter acknowledges the challenges associated with designing a program that maximizes access while also protecting the interests of the taxpayer, and the recommendations are intended to promote these objectives while also alleviating over-restrictive conditions that could discourage participation. The recommendations include:
- Revising the provisions for the Main Street Priority Loan Facility (MSPLF) to more closely align with the Main Street New Lending Facility (MSNLF) with regard to priority while maintaining the flexibility on leverage, the ability to refinance and the increased risk retention;
- Permitting the use of either adjusted earnings before interest, taxes, depreciation and amortization (EBTIDA) existing in credit documentation or internal methodologies for purposes of setting the maximum loan amount, while making clear that EBITDA used in any underwriting decision or Main Street loan documentation may be different to that which has previously been used with regard to the existing borrower or similarly situated borrower;
- Modifying the four-year term-to-maturity requirement to allow for shorter-dated program loans;
- Modifying the Main Street Expanded Loan Facility (MSELF) hold to maturity requirement in relation to the underlying loan; and
- Modifying debt repayment restrictions to allow for amendments to non-program debt, permit payments on pre-existing contractually triggered debts, allow borrowers to continue using revolving lines of credit, allow borrowers to make “catch-up” payments on previously missed obligations, and extend the refinancing exceptions outlined in the MSPLF to the MSNLF and MSELF.
To read the comment letter, please click the “Learn More” link below. BPI filed a more detailed and technical supplemental comment letter on May 8, which can be found here.