Swapping Main Street Lending Program Loans

Due to the economic disruptions caused by the COVID-19 pandemic, the Federal Reserve established the Main Street Lending Program (MSLP) to provide support to small and medium-sized businesses.  Under this program, lenders across the country extended over $17 billion in 5-year term loans to eligible borrowers.  While the MSLP ended on January 8th, 2021, borrowers still have the opportunity to hedge the floating rate exposure on these loans by entering into swaps with their lenders.  In the document below, we discuss potential swap structures and some items to consider when hedging Main Street loans.