I have read several articles about the Main Street Lending Program comparing it to the Paycheck Protection Program.  This comparison is a mistake.  Comparing the programs is like comparing apples and oranges.  Yes, they are both in the Cares Act family, but the similarities stop there.

Here are five key ways that the MSLP and PPP programs are entirely different. 

  • PPP loan amounts are calculated based upon your previous payroll expenses and had nothing to do with your financial performance.  MSLP loans are only available to those with a bare minimum of $43.66 K of positive EBITDA in 2019. 
  • PPP loans had no minimum amount and are designed for every small business or independent contractor in America.  The lowest MSLP loan will be $250 K, and the highest will be $300 M.  They are designed for bigger businesses. (Perhaps the program needs to be renamed). 
  • PPP loans were designed with the intent that they would primarily be forgiven and would not have to be repaid.  MSLP loans need to be repaid, and business owners need to think about them more carefully.
  • PPP loans are 100 % guaranteed by the U.S. Government, leaving the banks that issued them no risk.  With the MSLP program, while the Federal Reserve purchases 95% of the loan from the issuing bank, the bank still is taking risks with the credits and needs to underwrite them accordingly.
  • To apply for a PPP, you need to provide historical payroll information.  The MSLP application will include a comprehensive underwriting package, similar to applying for a traditional loan.

With all of the differences, the MSLP offers a compelling opportunity for eligible businesses to bolster their balance sheets with low priced capital.  For those interested, I will be offering an Aminar on the program at noon EST today.