Fed’s Main Street Lending Program Eases Restrictions on Non-Profits
Posted on 07/17/2020
The Federal Reserve is altering its Main Street Lending Program to have greater participation from non-profit organizations such as hospitals, social service organizations, and educational institutions. The Main Street Lending Program was established with the approval of the Treasury Secretary and with $75 billion in equity provided by the Treasury Department from the CARES Act. Eligible non-profit entities must not have endowments more than US$ 3 billion.
| Main Street Lending Program Nonprofit Loan Options | Nonprofit New Loans | Nonprofit Expanded Loans |
|---|---|---|
| Term | 5 years | |
| Minimum Loan Size | $250,000 | $10 million |
| Endowment Cap | $3 billion | $3 billion |
| Years in Operation | At least 5 years | At least 5 years |
| Eligibility Criteria | Minimum employees 10 (previously 50) | Minimum employees 10 (previously 50) |
| (See Term Sheets for More Detail) | Total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019 (previously 70% of revenues) | 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%) | 2019 operating margin of 2% or more, (previously 5%) | |
| Current days cash on hand 60 days (previously 90 days) | 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%) | Current debt repayment capacity—ratio of cash, investments and other resources to outstanding debt and certain other liabilities—of greater than 55% (previously 65%) | |
| Maximum Loan Size | The lesser of $35 million, or the borrower’s average 2019 quarterly revenue | The lesser of $300 million, or the borrower’s average 2019 quarterly revenue |
| Risk Retention | 5% | 5% |
| Principal Repayment | Principal deferred for two years; years 3-5: 15%, 15%, 70% | Principal deferred for two years; years 3-5: 15%, 15%, 70% |
| Interest Payments | Deferred for one year | Deferred for one year |
| Rate | LIBOR + 3% | LIBOR + 3% |
Source: Federal Reserve (July 17, 2020).
Keywords: Federal Reserve System.
