Access to credit for nonprofit organizations through loans to small and medium-sized groups that were in sound financial condition before the coronavirus pandemic is the hoped-for result of an expanded lending facility by the Federal Reserve, the agency said Monday.
Among the details of the program, an extension of the Main Street Lending Program (MSLP) established by the Fed for small- and medium-sized businesses, are: minimum loan size of the $250,000, maximum size of $300 million, principal payments deferred for the first two years of the loan, interest payments deferred for one year, two loan options would be offered.
The terms of the program are similar to that for for-profit groups. However, the Fed pointed out some key has differences in the borrower-eligibility provisions of the non-profit program, to reflect the “operational and accounting practices of the nonprofit sector.”
The Fed said those provisions include:
- Minimum of 50 and maximum of 15,000 employees;
- Financial thresholds based on operating performance, liquidity, and ability to repay debt;
- An operational history of at least five years; and
- A limit on endowments of no more than $3 billion.
Additionally, the Fed said, each organization must be a tax-exempt group under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code.
“Because the circumstances, structure, and needs of nonprofit organizations vary widely, public feedback is being sought to help make the proposed program as efficient and effective as possible, the Fed said, adding that comments will be taken via email until June 22.