The Fed’s action allows the program to accommodate a wider range of nonprofit operating models and provides greater access to credit for nonprofit organizations, such as educational institutions, hospitals, and social service organizations.
The Federal Reserve Board announced it has modified the Main Street Lending Program by approving two new loan options to provide support to a broad range of nonprofit organizations that were in sound financial condition prior to the coronavirus pandemic. The Fed also released updated term sheets for the Nonprofit Organization Expanded Loan Facility and the Nonprofit Organization New Loan Facility. According to the Fed, the modification will provide greater credit access for nonprofit organizations, including educational institutions, hospitals, and social service organizations.
The Main Street Lending Program was established with $75 billion in equity provided by the Treasury Department from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The 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.
Under the updated terms, 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. In addition, an organization must be a tax-exempt organization as described in section 501(c)(3) or 501(c)(19) of the Internal Revenue Code.
Nonprofits are eligible for two loan options. The minimum loan size for the Nonprofit Organization New Loan Facility is $250,000, and the maximum is $35 million. For the Nonprofit Organization Expanded Loan Facility, the minimum is $10 million, and the maximum is $300 million. Principal payments will be deferred for the first two years of the loan, while interest payments will be deferred for one year.
MainStory: TopStory Covid19 FederalReserveSystem FinancialStability Loans
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