The Main Street New Loan Facility Program was established as a part of the CARES Act earlier this year to provide banks with a 95% guaranteed re-payment when they extend credit under this program to a business borrower.

In an apparent reaction to the delay in extending new PPP loans the SBA announced on Friday October 30 that it is expanding the Main Street New Loan Facility Program to now permit loans as small as $100,000, in lieu of the former $250,000 minimum size, and confirmed that the Department of Treasury has committed to make $75 billion available for the Program.

Under the Program, a U.S. federally insured depository institution (a bank whose deposits qualify for FDIC protection) is able to make a loan to a borrower and immediately transfer 95% of the risk and reward of the loan to the Federal Reserve Bank of Boston (the “Reserve Bank”).

The announcement points out that the combined size of all Main Street New Loan Facility Programs will be $600 billion.

In order to be an “eligible borrower” the individual or entity must have been established prior to March 13, 2020 as a for-profit “business” that would be eligible to borrow money under the PPP. This may be evidenced by the fact that the borrower has already received a PPP loan. A borrower cannot be insolvent at the time that the loan is made, except to the extent that the insolvency is caused solely by the economic and business circumstances caused by COVID-19.

Apparently businesses that received EIDL (“Economic Injury Disaster Loans”) will not be eligible, but those individuals and businesses who received the EIDL non-repayable grants of between $1,000 and $10,000 will be eligible if they did not otherwise receive an EIDL loan.