Main Street Lending Program vs. PPP

By Salene Mazur Kraemer, Esq.
Partner, Bernstein-Burkley

On Monday, June 15, the Federal Reserve launched the long-awaited Main Street Lending Program to support lending to small- and medium-sized businesses with fewer than 15,000 workers.

You might wonder how this program differs from the Paycheck Protection Program (PPP), which debuted in April 2020. The two programs are very different from one another and offer unique benefits, depending on your company.

Here’s what you need to know about the two programs aimed at helping relieve the financial distress caused by COVID-19.

What are the differences between Main Street Lending and the PPP?

The Main Street Lending Program loans, administered by the Federal Reserve, are not forgivable; however, they do have considerably low interest rates compared to other business loans. The PPP loans, managed by the Small Business Association, are forgivable, as long as they are used for payroll and other specific expenses under the loan parameters.

How do I get a Main Street Lending loan?

You must apply through a bank, which can then sell 95 percent of the loan to the Fed, transferring most of the risk to the central bank. While this program was initially announced earlier this year in March, one of the reasons why it took so long to put into action is that the Fed was trying to get the details right, since they had never participated in anything like this before.

Some of the considerations for this program were the adjustments to the loan amounts: The minimum loan you can take out is $250,000 and the maximum is $300 million. Also, maturities are extended to five years, and borrowers don’t have to pay any interest in the first year and can start paying principal after two years.

Working with Banks

Our Bernstein-Burkley team has broad experience and good working relationships with multiple lending institutions. Our attorneys are equipped to discuss the Main Street Lending program and other financing options with you.

For more information, call us at (412) 456-8100 or email us at 

Written by Bernstein- Burkley, P.C. on June 19, 2020

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