Nelson Mullins Riley & Scarborough LLP

The Federal Reserve recently announced a new proposal to expand its Main Street Lending Program to nonprofit organizations. Public comments may be made to the Federal Reserve via email, here, until Monday, June 22, 2020.

The Main Street Lending Program is the Federal Reserve’s existing lending program for small and medium-sized businesses and was previously available only to for-profit businesses. A description of the current Main Street Lending Program may be found here.

Main Street Lending Program for Nonprofit Organizations

The Federal Reserve proposed two new Main Street lending facilities for nonprofit organizations: the Nonprofit Organization New Loan Facility (“NONLF”); and the Nonprofit Organization Expanded Loan Facility (“NOELF”). The proposed terms of each facility are set forth in the table below.

The NONLF and NOELF, as proposed, would be available to a 501(c)(3) tax-exempt nonprofit organization or a 501(c)(19) tax-exempt veterans’ organization that:

  • Has been in continuous operation since January 1, 2015;
  • Either:
    • Has 15,000 employees or fewer, or
    • Had 2019 annual revenues of $5 billion or less;
  • Has at least 50 employees;
  • Has an endowment of less than $3 billion;
  • Has 2019 revenues from donations (including proceeds from fundraising, federated campaigns, gifts and similar funds) that are less than 30% of 2019 total revenues;
  • Has a ratio of 2019 Adjusted EBIDA to unrestricted 2019 operating revenue of at least 5%;
  • Has liquid assets to cover at least 90 days of average daily expenses;
  • Has at the time of loan origination, a ratio of unrestricted cash and investments to existing outstanding and undrawn available debt, plus any NONLF/NOELF loan, plus CMS accelerated and advance payments, that is greater than 65%;
  • Is created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the United States; and
  • Did not participate in any other Main Street lending facility, the Primary Market Corporate Credit Facility, or the Municipal Liquidity Facility, and has not received specific support under Title IV of the CARES Act.

These initial proposed requirements are subject to change following the public feedback and comment period.

The general terms and conditions of the NONLF and NOELF, as proposed, are set forth in the table below: