June 18, 2020
Plans Proposed to Include Nonprofits in Main Street Lending Program
The Federal Reserve unveiled plans to offer loans to small- and mid-sized nonprofit organizations as part of its Main Street Lending Program which was established to help employers during the pandemic.
The initial Main Street Program, created in the CARES Act, would have only been open to businesses, but the Federal Reserve recognized the needs of nonprofits to have a similar lending program, particularly those with over 500 employees which are ineligible for the Paycheck Protection Program’s Small Business Administration loans.
Federal Reserve Chair Jerome Powell said in a statement: “Nonprofits provide vital services across the country and we are working to help them through this difficult time.”
Loans would be available to 501(c)3 organizations and 501(c)19 veterans organizations, with 50 to 15,000 employees. Associations established as 501(c)6 organizations would not be eligible to participate, nor would nonprofits with endowments larger than $3 billion. Eligible nonprofits could seek loans from a minimum of $250,000 to a maximum of $300 million. Principal payments would be deferred for the first two years of the loan and interest payments would be deferred for a year.
The Federal Reserve has opened a short one-week window for comments on the proposed terms of the program, with feedback due by June 22.
The higher education community will be requesting all employee size restrictions be removed, as well as the limitation by endowment size. Several accounting definitions will also be asked to be corrected and a request will be made for more favorable terms and conditions, including an extended window for repayment.
The initial Main Street Program, created in the CARES Act, would have only been open to businesses, but the Federal Reserve recognized the needs of nonprofits to have a similar lending program, particularly those with over 500 employees which are ineligible for the Paycheck Protection Program’s Small Business Administration loans.
Federal Reserve Chair Jerome Powell said in a statement: “Nonprofits provide vital services across the country and we are working to help them through this difficult time.”
Loans would be available to 501(c)3 organizations and 501(c)19 veterans organizations, with 50 to 15,000 employees. Associations established as 501(c)6 organizations would not be eligible to participate, nor would nonprofits with endowments larger than $3 billion. Eligible nonprofits could seek loans from a minimum of $250,000 to a maximum of $300 million. Principal payments would be deferred for the first two years of the loan and interest payments would be deferred for a year.
The Federal Reserve has opened a short one-week window for comments on the proposed terms of the program, with feedback due by June 22.
The higher education community will be requesting all employee size restrictions be removed, as well as the limitation by endowment size. Several accounting definitions will also be asked to be corrected and a request will be made for more favorable terms and conditions, including an extended window for repayment.
For more information, please contact:
Karin Johns