Main Street Lending Improvement Act of 2020

II 116TH CONGRESS 2D SESSION S. 4655 To make improvements to the Main Street Lending Program, and for other purposes. IN THE SENATE OF THE UNITED STATES SEPTEMBER 22, 2020 Mr. PERDUE introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To make improvements to the Main Street Lending Program, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Main Street Lending 4 Improvement Act of 2020’’. 5 SEC. 2. MAIN STREET LENDING PROGRAM. 6 (a) SENSE OF CONGRESS.—It is the sense of Con- 7 gress that— 8 (1) the Main Street Lending Program should 9 serve as a ‘‘bad bank’’ to hold nonperforming and il- 10 VerDate Sep 11 2014 00:55 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4655.IS S4655 kjohnson on DSK79L0C42PROD with BILLS 2 •S 4655 IS liquid loans during the economic shock triggered by 1 the COVID–19 pandemic; 2 (2) the Department of the Treasury and the 3 Board of Governors of the Federal Reserve System 4 have served as strong guardians of taxpayer monies 5 and strived above and beyond their mandates in 6 launching the Main Street Lending Program; 7 (3) as of the date of enactment of this Act, the 8 Main Street Lending Program has not operated as 9 envisioned by Congress; 10 (4) with bankruptcies hitting record highs not 11 seen since the 2009 financial crisis, the Main Street 12 Lending Program should serve as a vital lifeline to 13 stave off a catastrophic wave of bankruptcies by 14 small- and medium-sized enterprises; 15 (5) earnings before interest, taxes, depreciation, 16 and amortization is not a generally accepted ac- 17 counting principal measurement and its calculations 18 can vary from one company to the next; 19 (6) the prominence of earnings before interest, 20 taxes, depreciation, and amortization only emerged 21 in the advent of the leveraged buyout in the 1980s; 22 and 23 (7) there are many companies outside of the 24 earnings before interest, taxes, depreciation, and 25 VerDate Sep 11 2014 00:55 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4655.IS S4655 kjohnson on DSK79L0C42PROD with BILLS 3 •S 4655 IS amortization leverage test that can still present 1 themselves as growing concerns in a non-COVID 2 economy. 3 (b) ALTERNATIVE ASSET TEST.—It is the sense of 4 Congress that, in carrying out the Main Street Lending 5 Program, the Department of the Treasury and the Board 6 of Governors of the Federal Reserve System should con- 7 sider— 8 (1) using earnings or cash flow metrics as a 9 metric for eligibility in the facilities of that Program; 10 and 11 (2) providing alternative tests for borrowers be- 12 cause earnings before interest, taxes, depreciation, 13 and amortization— 14 (A) is not a one size fits all equation; 15 (B) ignores the cost of assets and working 16 capital; and 17 (C) fails to appropriately measure the abil- 18 ity of an entity to generate cash as opposed to 19 an operating cash flow test. 20 (c) BOSTON FED HELPLINE.—The Federal Reserve 21 Bank of Boston shall, with respect to the operation of the 22 Main Street Lending Program— 23 (1) create a lender helpline to address lender- 24 specific questions; and 25 VerDate Sep 11 2014 00:55 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4655.IS S4655 kjohnson on DSK79L0C42PROD with BILLS 4 •S 4655 IS (2) consider additional guidance and informa- 1 tion with the focus aimed at addressing the concerns 2 of small and mid-size financial institutions. 3 (d) EXEMPTIONS FOR LOANS UNDER $5,000,000.— 4 With respect to any loan, the amount of which is less than 5 $5,000,000, a financial institution may collect interest on 6 the entirety of the loan if a participation in the loan is 7 sold to the special purpose vehicle under the Main Street 8 Lending Program. 9 (e) STREAMLINE MAIN STREET LENDER PARTICIPA- 10 TION PROGRAM.—With respect to the Main Street Lend- 11 ing Program, for financial institutions with less than 12 $25,000,000,000 in assets— 13 (1) the Department of the Treasury and the 14 Board of Governors of the Federal Reserve System 15 will strive to reduce borrower reporting burdens by 16 limiting any reporting requirement to at most once 17 a quarter and reduce the amount of data points they 18 are required to submit; 19 (2) the Federal Reserve Bank of Boston shall 20 verify that the financial institution meets both the 21 asset test and is a well capitalized institution under 22 the Federal Deposit Insurance Act (12 U.S.C. 1811 23 et seq.) and the Federal Credit Union Act (12 24 U.S.C. 1751 et seq.); 25 VerDate Sep 11 2014 00:55 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4655.IS S4655 kjohnson on DSK79L0C42PROD with BILLS 5 •S 4655 IS (3) the special purpose vehicle under the Pro- 1 gram shall purchase 99 percent of the interest in a 2 loan participation originated by the financial institu- 3 tion under the Program; 4 (4) mortgage debt shall not be included in the 5 earnings before interest, taxes, depreciation, and 6 amortization leverage test; 7 (5) the financial institution shall collect interest 8 on the entirety of a loan, a participation in which is 9 sold under the Program; and 10 (6) the Federal Reserve Bank of Boston shall 11 provide— 12 (A) automatic preapproval for institutions 13 under the Program for loans up to $5,000,000; 14 and 15 (B) that— 16 (i) the special purpose vehicle under 17 the Program shall wire 99 percent of the 18 participation amount to preapproved lend- 19 ers upon the lender’s uploading of a bor- 20 rower’s name, W–9, amount, type of Main 21 Street Loan, and certification of lender’s 22 receipt of signed loan documents; 23 (ii) additional borrower and loan in- 24 formation and uploading of closing docu- 25 VerDate Sep 11 2014 00:55 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4655.IS S4655 kjohnson on DSK79L0C42PROD with BILLS 6 •S 4655 IS ments in the special purpose vehicle portal 1 may occur within 5 business days of fund- 2 ing; and 3 (iii) a borrower may only receive a 4 loan originated pursuant to the terms of 5 this subsection once. 6 Æ VerDate Sep 11 2014 00:55 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S4655.IS S4655 kjohnson on DSK79L0C42PROD with BILLS