Key takeaways from the updated FAQs
A. Eligible borrower debt.
An eligible borrower’s debt that is being refinanced by an MSPLF loan should be excluded in the calculation of the eligible borrower’s existing outstanding and undrawn available debt. If the outstanding debt is being partially refinanced by an MSPLF loan, only the portion that is being refinanced may be excluded from the calculation. All such excluded debt must be fully refinanced by the MSPLF loan.
B. Conflicts of interest certification.
Each eligible lender or eligible borrower must certify that it is not an entity in which the president, vice president, head of an executive department, member of Congress, or certain immediate family members of such government officials (the Covered Individuals) hold a “controlling interest.”
- Good faith. A reasonable level of diligence is required to make the conflicts of interest certification in good faith.
- Reasonable diligence standard. This reasonable diligence standard applies to all types of equity interests, including common stock, preferred stock, and equivalent LLC or partnership interests, and equity interests held by financial intermediaries such as broker-dealers, custodians, and investment funds. To meet this standard, an eligible lender or eligible borrower:
i. Must consider its actual knowledge.
ii. Must determine whether a Covered Individual is the beneficial owner of any 5 percent or greater equity interest (and, if necessary, ask a beneficial owner to confirm they are a Covered Individual).
iii. May rely upon information disclosed pursuant to sections 13(d) and 13(g) of the Securities Exchange Act of 1934.
C. Condition of funding operational details.
The Main Street special purpose vehicle (the Main Street SPV) will generally be able to advance funds to purchase the participation in an MSNLF loan, an MSPLF loan, or an MSELF upsized tranche within one business day of receiving the lender’s funding notice, if received before 7 p.m. ET.
D. Regulatory lending limits.
Loans made under the Program apply toward an eligible lender’s lending limit. Depending on the loan funding method, Program loans issued by national banks, federal savings associations, and state savings associations should be treated as follows:
- Funded loan. If an eligible lender funds an MSNLF loan, an MSPLF loan, or an MSELF upsized tranche to an eligible borrower before seeking to sell a participation to the Main Street SPV:
i. The full amount of the loan counts toward the eligible lender’s lending limit until the Main Street SPV purchases the participation.
ii. After the Main Street SPV purchases the participation, that portion of the loan will no longer be treated as a loan to the eligible borrower for purposes of the Office of the Comptroller of the Currency’s (the OCC’s) lending limit regulations.
- Condition of funding. If an eligible lender (1) extends an MSNLF loan, an MSPLF loan, or an MSELF upsized tranche to an eligible borrower, but makes the loan funding contingent on a binding commitment from the Main Street SPV that it will purchase a participation in the loan and (2) timely provides a funding notice to the Main Street SPV:
i. The retained percentage of the loan should be used when calculating the eligible lender’s lending limit to the eligible borrower.
ii. If the Main Street SPV funding occurs more than one business day after the eligible lender funds the loan, the entire loan will be counted toward the eligible lender’s lending limit, but any amount of the loan exceeding the lending limit will not be a violation loan (provided the delay was outside of the eligible lender’s control).
iii. After the Main Street SPV purchases the participation, that portion of the loan will no longer be treated as a loan to the eligible borrower for purposes of the OCC’s lending limit regulations.
- State-chartered, and member and nonmember banks. To determine how a Program loan applies to its lending limit, state-chartered banks should review applicable state law, and state member and nonmember banks should consult their state banking supervisor.
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