Federal Reserve: Main Street Lending Program Modified to Provide Greater Access to Credit for Nonprofit Organizations

The Federal Reserve Board on Friday modified the Main Street Lending Program to provide greater access to credit for nonprofit organizations such as educational institutions, hospitals, and social service organizations. As detailed in term sheets released today, the Board approved two new loan options to provide support to a broad set of nonprofit organizations that were in sound financial condition prior to the pandemic.

“Nonprofits provide vital services across the country and employ millions of Americans,” Federal Reserve Chair Jerome H. Powell said. “We have listened carefully and adapted our approach so that we can best support them in carrying out their vital mission during this extraordinary time.”

Based on public feedback to proposals released for comment on June 15, the minimum employment threshold for nonprofits was lowered from 50 employees to 10, the limit on donation-based funding was eased, and several financial eligibility criteria were adjusted to accommodate a wider range of nonprofit operating models. Additionally, like the proposed terms, each organization must be a tax-exempt organization as described in section 501(c)(3) or 501(c)(19) of the Internal Revenue Code.

The Main Street nonprofit loan terms generally mirror those for Main Street for-profit business loans, including the interest rate, principal and interest payment deferral, five-year term, and minimum and maximum loan sizes. Nonprofits will be eligible for two loan options, and the chart below has additional details on the final terms.

The Main Street Lending Program was established with the approval of the Treasury Secretary and with $75 billion in equity provided by the Treasury Department from the CARES Act.Make Full Screen

Main Street Lending Program Nonprofit Loan OptionsNonprofit New LoansNonprofit Expanded Loans
Term5 years
Minimum Loan Size$250,000$10 million
Endowment Cap$3 billion
Years in OperationAt least 5 years
Eligibility Criteria
(See Term Sheets for More Detail) 
Minimum employees 10 (previously 50)Total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019 (previously 70% of revenues)2019 operating margin of 2% or more, (previously 5%)Current days cash on hand 60 days (previously 90 days)Current debt repayment capacity—ratio of cash, investments and other resources to outstanding debt and certain other liabilities—of greater than 55% (previously 65%)
Maximum Loan SizeThe lesser of $35 million, or the borrower’s average 2019 quarterly revenueThe lesser of $300 million, or the borrower’s average 2019 quarterly revenue
Risk Retention5%
Principal RepaymentPrincipal deferred for two years; years 3-5: 15%, 15%, 70%
Interest PaymentsDeferred for one year
RateLIBOR + 3%

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