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Financial Services Law Insights and Observations

Fed proposes expansion of Main Street Lending Program to nonprofit organizations

Federal Issues Federal Reserve CARES Act Small Business Lending Agency Rule-Making & Guidance Covid-19

Federal Issues

On June 15, the Federal Reserve Board (Fed) announced plans to seek public feedback on a proposal to expand the Main Street Lending Program to tax-exempt, nonprofit organizations. The proposed expansion would allow small and medium-sized nonprofits to apply for loans for additional liquidity, provided they were in sound financial condition prior to the start of the Covid-19 pandemic. The loan terms would be the same as those for Main Street business loans, which include (i) a minimum loan size of $250,000 and a maximum loan size of $300 million; and (ii) principal payment deferments for the first two years of a loan, and interest payment deferments for one year. The proposed expansion would also provide two loan options with modified borrower eligibility requirements that “reflect the operational and accounting practices of the nonprofit sector.” Feedback on the proposal may be submitted through June 22. The Fed’s announcement also contains a chart covering the detailed changes and term sheets for the program’s Nonprofit Organization Expanded Loan Facility and Nonprofit Organization New Loan Facility.