Fed opens Main Street Lending Program to nonprofits
WASHINGTON — The Federal Reserve has opened its Main Street Lending Program to nonprofit organizations, expanding the existing program intended to help businesses weather the coronavirus pandemic.
The addition of two new credit facilities to the program will facilitate loans to organizations like educational institutions, hospitals and social service groups with at least 10 employees, the central bank said Friday. Nonprofit organizations will be able to obtain loans of at least $250,000 and up to $300 million.
“Nonprofits provide vital services across the country and employ millions of Americans,” Federal Reserve Chair Jerome Powell said in a press release. “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.”
When the Fed originally proposed opening up the $600 billion program to nonprofits on June 15, it only proposed offering loans to nonprofit organizations with at least 50 employees, but adjusted that threshold after receiving feedback.
The Fed also relaxed some of the original eligibility criteria it had proposed for nonprofits, lowering the total amount of non-donation revenue a borrower had to have from 2017 to 2019 from 70% to 60% and cutting the required 2019 operating margin from 5% to 2%.
To qualify for a loan through the program, nonprofit borrowers must have been in operation at least five years and have less than $3 billion in endowment.
The other loan terms for nonprofit borrowers are the same as for the borrowers in the program’s other facilities.
Like the other facilities in the Main Street program, the Nonprofit New Loan Facility and the Nonprofit Expanded Loan Facility will make loans available to eligible borrowers through third-party banks. The Fed, through the Main Street program, will then purchase a 95% stake in the loans.