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MDMA Submits Recommendations for Updating the Main Street Business Lending Program Term Sheets

Friday, April 17, 2020  
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MDMA submitted recommendations to the Department of Treasury and Federal Reserve today for updating the Main Street Business Lending Program (MSLP) term sheets to provide the greatest access to the program. In our letter we highlighted that as currently structured, the draft terms sheets for both the Main Street “new” loan facility and the “expanded” facility appear to exclude many innovative medical technological companies that treat cancer, cardiovascular disease, neurological disorders and other critical conditions. Specifically, all companies who have expenses that exceed revenues would be excluded under the threshold set to establish the maximum amount for a loan.

 

In an effort to realize the full impact of the Main Street program and the Administration’s desire to ensure liquidity for all small to mid-sized businesses that need it, MDMA strongly encouraged the Federal Reserve and Treasury to make several improvements to the Draft Term Sheets for the Main Street New Lending Programs.

 

These improvements include:

 

1)    Modify the current methodology for the maximum loan amount under MSNLF to include two additional options: 1) an unsecured loan up to $15M that would not require the EBITDA/leverage analysis (the $25M maximum would remain with the current thresholds in place); and 2) an unsecured loan of up to 0.5xEBITDA for companies that are currently above the EBITDA/leverage thresholds;

2)    The loan should be subordinate to any other loans;

3)    Participating banks would be a) required to provide such loans outside of any existing debt covenants and not accelerate any existing covenant provisions, and b) prohibited from increasing interest rates on any existing loans due to perceived increased risk;

4)    Loans would be structured as cash or paid-in-kind interest, due upon a change-in-control or after any existing credit facilities; and

5)    Loans would not be overly restrictive, including limitations that increase the amount of debt required to stay afloat. We encourage the administration to allow companies to utilize the necessary tools to lower the amount of debt needed for liquidity and sustainability.

 

To view the letter MDMA sent to Treasury and the Federal Reserve, CLICK HERE