Another provision within the CARES Act is the Main Street Lending Program which is designed for small and medium-sized businesses. This program is different from the Paycheck Protection Program, or PPP, that has taken the small business community by storm these past few weeks however, just like the PPP, we await guidance and information regarding the details of this program.
The loan program is available to U.S. entities with up to 10,000 employees or less than $2.5 billion in 2019 annual revenues. Obviously, independent pharmacies easily fit this eligibility criteria. The business must have been in good financial standing before COVID-19 and must have at least $250,000 in EBITDA (Earnings Before Interest Depreciation and Amortization) with no debt. If you have higher debt, you will need a higher EBITDA.
The minimum loan amount is $1 million with a 4-year maturity and a favorable adjustable interest rate. There is a deferral of principal and interest for one year and no prepayment penalties. However, unlike the PPP, there is no loan forgiveness with this loan program.
Clearly, this is a more high powered option among the small business relief choices, but an option nonetheless, for select pharmacies that are in need of additional funding and can meet the eligibility, terms and conditions.
Stay tuned for more information on the Main Street Lending Program as guidance is released. In the meantime, review the below link for information on this loan program from the Federal Reserve:
https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm
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