We are thrilled to announce that Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) has joined forces with Bacchetta & Company in an exciting new partnership!
'Main Street' Loan Program to Support Small to Medium-Sized Businesses
On April 9, 2020, the Federal Reserve announced it would be taking additional steps to support the US economy by providing up to $2.3 trillion in loans, including through the creation of a Main Street Lending Program. This program will support main street businesses by providing financing to lenders that make direct loans to these small to medium-sized companies.
As part of the response to the COVID-19 emergency, this lending facility is meant to support those SMBs who were in good financial standing prior to the pandemic, and who might not have access to broader capital markets or who don’t qualify for the SBA’s Paycheck Protection Program (PPP).
Treasury Secretary Steven Mnuchin says that 40,000 mid-sized companies who employ approximately 35 million Americans stand to benefit from the Main Street Lending Program.
According to Vice Chairman Randal Quarles, the Fed’s chief banking supervisor, “officials continue to work out operational details” and the facility should be available soon.
“We are putting together the mechanisms for that credit to be distributed through the banks,” Quarles said. “That’s probably two to three weeks away.”
Eligible borrowers are businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. The business must be created or organized in the U.S. or under the laws of the U.S. with significant operations in and a majority of its employees based in the U.S.
The announcement did not provide guidance on how businesses must count their employees or whether affiliation rules may apply to the eligibility requirements listed above.
Loan Amounts
To qualify, loans must have originated on or after April 8, 2020. Loans will be available at a minimum of $1 million up to a certain maximum amount, which is the lesser of:
- 25 million, or
- an amount that, when added to the applicant’s existing outstanding and committed but undrawn debt, does not exceed four times 2019 EBITDA.
- $150 million;
- 30 percent of the applicant’s existing outstanding and committed but undrawn bank debt; and
- an amount that, when added to the applicant’s existing outstanding and committed but undrawn debt, does not exceed six times 2019 EBITDA.
- These leverage conditions could prevent highly-leveraged businesses from participating in the program.
- Small businesses participating in the SBA’s Paycheck Protection Program are also allowed to take advantage of the Main Street Program. The two programs are not mutually exclusive for those businesses that would qualify for both.
Below are the additional requirements that apply to Main Street Program loans:
- Proceeds from the loan cannot be used to repay or refinance pre-existing loans or lines of credit of the borrower.
- The borrower may not repay any debt of equal or lower priority while the Main Street loan remains outstanding. The only exception is mandatory principal payments.
- The lender must attest that it will not cancel or reduce any existing lines of credit to the borrower, and the borrower must attest it will not seek to cancel or reduce any of its outstanding lines of credit with any lender (including the participating lender).
- The borrower must attest that it requires financing due to the pandemic, and that it will make reasonable efforts to maintain its payroll and retain its employees during the term of the loan.
- The borrower must attest that it meets the EBITDA leverage condition stated above.
- The borrower must attest that it will follow compensation, stock repurchase, and capital distribution restrictions that apply to direct loan programs under section 4003(c)(3)(A)(ii) of the CARES Act.
- Eligible lenders and borrowers will be required to certify they are eligible to participate, including in light of the conflicts of interest prohibition in section 4019(b) of the CARES Act.
Applicants must pay an origination fee of 100 basis points of the principal amount of the loan to be sold to the Main Street Program. Participating lenders must also pay a facility fee of 100 basis points of the principal amount, and lenders are authorized to charge this fee to the applicant.
Unless extended by the Treasury and Federal Reserve, the Main Street Program will cease participations on September 30, 2020.
Further details on the Main Street Program have not yet been released. For assistance and further information, please contact our office.
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Offices in Flemington, NJ and Califon, NJ
Our Mission: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we are on a mission to redefine the tax experience for individuals and small businesses. With a focus on personalized service, strategic planning, and expert guidance, we aim to empower our clients to succeed financially with confidence and ease.
Expertise in Action: With a wealth of experience and a team of dedicated professionals, we specialize in individual and small business tax preparation. While we excel in all areas of taxation, our passion lies in serving the unique needs of small business owners in New Jersey. We understand that small business taxation requires specialized knowledge and attention to detail, which is why we go above and beyond to ensure our clients receive the guidance and support they deserve.
Tailored Solutions for Every Client: Whether you're a high-net-worth individual seeking comprehensive tax planning or a small business owner in need of accounting and bookkeeping assistance, we have the expertise to meet your needs. Our team takes the time to understand your specific situation and develop customized solutions that align with your goals and objectives.
Why Choose Us?: What sets us apart from other New Jersey tax firms is our commitment to excellence and innovation in the field of taxation. We don't just prepare tax returns; we provide strategic insights, proactive planning, and actionable advice to help our clients achieve their financial goals. With a team of two CPAs, an EA, and an ERO, we have the expertise and resources to deliver exceptional service and results.
Your Success is Our Priority: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we measure our success by the success of our clients. We are dedicated to building long-lasting relationships, providing unparalleled service, and helping our clients thrive in today's ever-changing tax landscape.
We can't wait for you to experience the Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) difference.
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