Nonprofit organizations such as educational institutions, hospitals, and social service organizations will have more access to credit through the Federal Reserve’s Main Street Lending Program (MSLP) as a result of modifications that added two new loan options, the Fed announced Friday.
The two new loan options make it possible for a broad set of nonprofit organizations that were in good shape before the coronavirus (COVID-19) pandemic to receive help from the facility, the Fed said.
Responding to public comments on two June proposals, the Fed has lowered the minimum employment threshold for nonprofits from 50 employees to 10, eased the limit on donation-based funding, and adjusted several financial eligibility criteria to accommodate a wider range of nonprofit operating models. The central bank noted that, as proposed, each organization must be a tax-exempt organization as described in section 501(c)(3) or 501(c)(19) of the Internal Revenue Code.
The Main Street 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 (see chart, term sheets for more).
The MSLP was established with the approval of the Treasury secretary and with $75 billion in equity provided by Treasury from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).