Fed Expands Main Street Lending Program to Certain Nonprofits
On Friday, the Federal Reserve expanded its Main Street Lending Program to include funding for nonprofit organizations like hospitals, educational institutions, and social service organizations. The updated term sheets include widely looser eligibility requirements than the original.
The Federal Reserve 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 updated requirements extend to any 501(c)(3) or 501(c)(19) organization, as long as the applicant's 2019 revenues were less than $5 billion and had less than 40% of those revenues sourced from donations. Below we have detailed all of the updated requirements and available options.
Eligibility Criteria
- Minimum employees 10 (previously 50).
- Total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019 (previously 70% of revenues).
- 2019 operating margin of 2% or more (previously 5%).
- Current days cash on hand 60 days (previously 90 days).
- Current debt repayment capacity—ratio of cash, investments, and other resources to outstanding debt and certain other liabilities—of greater than 55% (previously 65%).
- Nonprofits younger than five years or with an endowment larger than $3 billion will not be eligible.
Loan Options
- The term for both nonprofit new loans and nonprofit expanded loans is 5 years.
- Maximum loan size is anywhere from $250,000 up to $300 million. The minimum loan size for nonprofit new loans is $250,000 and $10 million for nonprofit expanded loans.
- Principal deferred for two years; years 3-5: 15%, 15%, 70%.
- Deferred interest payments for one year.
For more details and links to the term sheets, please click here.
Contact your Whittlesey advisor to discuss ways to maximize loan forgiveness.
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