Today, the Federal Reserve Board announced it is expanding the scope and eligibility for the Main Street Lending Program. The press release can be accessed on the Federal Reserve’s site. The program was created to support the economy by ensuring small and medium-sized businesses have the credit they need during the COVID-19 crisis. The availability of additional credit is intended to help companies that were in sound financial condition prior to the onset of the COVID-19 pandemic maintain their operations and payroll until conditions normalize. Frequently Asked Questions (FAQs) and answers for lenders and borrowers are available here.
Tribal business concerns are eligible for this program, as defined in the Main Street FAQs Section E, which includes tribal gaming entities. A Tribal business concern is defined as:
"... either (i) wholly-owned by one or more Indian tribal governments, or by a corporation that is wholly owned by one or more Indian tribal governments, or (ii) owned in part by one or more Indian tribal governments, or by a corporation that is wholly owned by one or more Indian tribal governments, if all other owners are either U.S. citizens or Businesses."
In addition, the FAQs incorporate modifications and clarifications, including the SBA’s recent interim final rules available at 85 Fed. Reg. 20811, 85 Fed. Reg. 21747, and 85 Fed. Reg. 23450. The Federal Reserve may further modify the application of these restrictions to Main Street.
The Federal Reserve Board received broad public input to arrive at the refinements. The changes include:
- Creating a third loan option where lenders retain a 15 percent share on loans to borrowers with greater leverage, in contrast to the existing loan options which required 5 percent;
- Lowering the minimum loan size for certain loans to $500,000; and
- Expanding the pool of businesses eligible to borrow.
The Main Street Lending Program was established under Section 13(3) of the Federal Reserve Act, with approval of the Treasury Secretary. The Treasury will provide $75 billion equity investment in the Special Purpose Vehicle as appropriated in the CARES Act.
The chart below summarizes the different options available:
The National Indian Gaming Association would like to thank all Member Tribes, sister tribal organizations, and advocates that helped in outreach to the Federal Reserve Board on this matter.
Please contact Danielle Her Many Horses at email@example.com if you have any questions or concerns with this alert.