The Main Street Lending Program, established by the CARES Act, has been modified to include two new loan options to provide credit to nonprofit organizations that were in sound financial condition prior to the COVID-19 pandemic.
Nonprofit organizations eligible for the program are tax-exempt organizations described in section 501(c)(3) or 501(c)(19) of the Internal Revenue Code. Other types of nonprofit organizations may be considered at the discretion of the Federal Reserve.
Organizations that received loans through the Small Business Administration Paycheck Protection Program or Economic Injury Disaster Loans may apply for the Main Street Lending Program if they qualify. Organizations must have at least 10 employees and have been in continuous operation since January 1, 2015.
In addition, eligible organizations must meet at least one of the following conditions: either have 15,000 employees or fewer or had 2019 annual revenues of $5 billion or less. There are additional requirements, including detailed financial conditions and ratios, that must be met to participate in the program.
The two loan options for nonprofit organizations under the program are the Nonprofit Organization New Loan Facility and the Nonprofit Organization Expanded Loan Facility.
The New Loan Facility has a minimum loan size of $250,000 and maximum loan size of the lesser of $35 million or the borrower’s average 2019 quarterly revenue. The Expanded Loan Facility has a minimum loan size of $10 million and maximum loan size of the lesser of $300 million or the borrower’s average 2019 quarterly revenue. Additional terms that apply to both types of loans:
- Term: 5 years
- Interest rate: LIBOR + 3%
- Principal repayment: Principal deferred for two years; years 3-5: 15%, 15%, 70% repayment
- Interest payments: Deferred one year
Note: If you are an organization primarily funded with government grants, it is unallowable to charge interest incurred to federal awards, and you may not charge expenses covered by loan proceeds to any award.
To obtain a Main Street Lending Program loan, applicants should submit an application to an eligible lender. For more information about the program, including full eligibility criteria, loan terms, listing of eligible lenders, and FAQs, visit the Federal Reserve’s website.
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