This week, the Federal Reserve Board announced that it is considering an expansion of the Main Street Lending Program to nonprofit organizations. The current program provides loans to small and medium-sized businesses and would potentially expand to small and medium-sized nonprofits in order to provide relief for liquidity needs during this challenging time. Loans for nonprofits under this proposal would follow similar provisions as loans for businesses.
The proposed loans would be for a five-year period, with principal payments deferred for the first two years and interest payments deferred for one year. Loan sizes will range between a minimum loan size of $250,000 to a maximum loan size of $300 million with interest rates on the borrowings set at LIBOR + 3%.
In order to qualify for the loans, nonprofits must have between 50 and 15,000 employees, demonstrate sound financial condition before the COVID-19 pandemic through a series of financial thresholds, five years or more of operations, and endowments below $3 billion. In addition, revenues for 2019 must be below $5 billion with less than 30% provided through donations.
Commentary on the proposal can be provided to the Fed until June 22nd through their website. All comments received will be made available to the public.
For additional information or assistance regarding the Main Street Lending Program, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal ([email protected]).
