Coronavirus Impacts to Lending


Coronavirus Lending Impacts

What loan options are available in today's environment? Learn about the Main Street Lending Program.

Loan Options amid COVID-19

The impacts of COVID-19 are potentially catastrophic for many businesses that extinguish their liquidity or violate the terms of their existing lending agreements. Further, these disruptions are likely to persist for some time. As the economic damage related to the coronavirus pandemic continues to unfold, many small and medium size businesses are considering new financing options to weather the economic storm. By taking advantage of loan options as soon as possible, companies will be able to restructure their balance sheets in a manner that can benefit the business well after the crisis has abated.

Which Loan Program is Right for My Organization?

On Friday March 27, 2020 the President signed into law The Coronavirus Aid, Relief, and Economic Security (CARES) Act. Provisions under the legislation allocated stimulus funding for two key programs to assist small and medium sized businesses access debt capital: Main Street Lending Program & Paycheck Protection Program.

While CEOs and CFOs are dealing with organizational changes due to the pandemic, it can often be hard to determine which loan programs are viable for the company. Even worse, they lack the time it takes to properly qualify lenders, compare loan terms and negotiate loan agreements. Below offers a quick guide to evaluate the loan options available through the recently passed CARES Act. Even better, Cerebro can help companies prepare their MSLP loan applications and evaluate other loan options to help middle market companies recapitalize. Clients still seeking help with PPP should contact their existing lenders. 

Main Street Lending Program

Up to $600 billion to help medium-sized business maintain keep workers employed amid the pandemic and economic downturn. This program provides regulated banks a funding facility to extend unsecured loans that are not federally guaranteed, but instead are sold to the Federal Reserve via a 95% participation.

How Do the New MSLP Loans Compare?

Chart: Comparing Main Street Lending Program Loan Terms

USDA Rural Development Program

With the USDA Rural Development’s Business & Industry CARES Act Program, rural business and agricultural lenders can partner with the USDA to help support and revitalize the economic infrastructure of rural communities impacted by the pandemic. USDA has nearly $1 billion in loan guarantee authority for this program, and will guarantee up to 90% for eligible loans. Loans may be used only to support rural businesses, including agricultural producers, that were in operation on Feb. 15, 2020. Program applications are due before September 15, 2021

NOTE: None of the information contained herein is intended to be legal, tax, or investment advice, nor should it be relied on as such. You should consult your own legal, tax investment or other advisors, at both the onset of any transaction and on an ongoing basis to determine the laws and analyses applicable to your specific circumstance. Cerebro Capital, Inc. hereby disclaims all warranties associated with this information. The information contained in this communication may be obtained from a variety of sources and may be subject to change and Cerebro does not accept responsibility for, or guarantee it to be, accurate, timely, secure, error-free, malware-free or virus-free. Cerebro disclaims any and all liability for the information and disclaims all express or implied warranties, including without limitation, any warranties for information or errors contained in, or omissions from, the information, and the implied warranties of merchantability and fitness for a particular purpose. Cerebro and its employees and officers shall not be liable for any loss or liability suffered by you resulting from the provision to you of such information or your use or reliance in any way on such information. Such information is being provided on an “AS-IS, WHERE-IS” basis and “WITH ALL FAULTS.”