The Federal Reserve on Friday opened the Main Street Lending Program to nonprofit organizations.
“Nonprofits provide vital services across the country and employ millions of Americans,” said Federal Reserve Chairman Jerome Powell. “We have listened carefully and adapted our approach so that we can best support them in carrying out their vital mission during this extraordinary time.”
The nonprofit organization loan terms generally mirror those for for-profit business loans, including the interest rate, principal and interest payment deferral, five-year term, and minimum and maximum loan sizes.
Nonprofit organizations can take loans up to $300 million with interest payments that can be deferred for one year.
The Fed also altered the eligibility criteria for getting a loan, including lowering the minimum employment threshold for nonprofit organizations from 50 workers to 10.
Nonprofit organizations benefiting from this loan program include educational institutions, hospitals, and social service organizations.
The Main Street Lending Program was part of the CARES Act that was enacted in March.
The program works through banks and, beyond nonprofit organizations, provides loans to small- and mid-sized businesses. Banks are able to make these loans because the Fed purchases 95% of them, meaning that banks only keep 5% of the loans on their books.
To qualify for a loan, businesses and nonprofit organizations had to be in good financial standing before the coronavirus hit the United States but are now facing financial hardship because of the pandemic.
