One of the most frustrating challenges over the past few months is keeping up with the continually evolving guidelines and rules surrounding the PPP, EIDL, and Main Street Lending Programs. Almost every day, another ream of paper comes out, and somewhere inside, there is a noteworthy tidbit that could ultimately turn what I advised people yesterday upside and on its head.
There are two new twists to the Main Street Lending Program that fall into this category. To put them into context, under the Main Street Program, a borrower is eligible for 4 or 6 x their 2019 EBITDA minus their existing debt.
In many scenarios, a business owner who owns the building that they operate their business out of, they hold the building (and its mortgage) in a separate company. While we used to believe that in these instances, the building debt was included in the company’s overall leverage calculation, it can now be taken out. So you can count the outstanding debt from your operating company into your calculation, and not worry about the mortgage debt. This will open up the program to more borrowers.
A second update is that you have equipment debt in your operating company. While it still counts to your overall debt calculation, you do not have to worry about its lien position in terms of the total security of the Main Street Loan.
At MultiFunding, we will continue to do our best to inform our community about the ever-evolving programs. And when something changes, we will tell you that as well. For those interested in the latest on the Main Street Lending program, I will be offering an Aminar at noon EST today.