Main Street Lending Program Is Now Available to Nonprofits

Not-for-profit organizations can now apply for loans under the Main Street Lending Program. Previously only available to for-profit businesses with more than 100 employees, the $600 billion program offers low-interest loans with relatively relaxed repayment terms. A Main Street loan may be an option if your organization needs funding to keep operating during this challenging time.

What is the Main Street Lending Program?

main street lending programThe Main Street Lending program offers loans through three credit facilities (the Main Street New Loan Facility, the Main Street Priority Loan Facility, the Main Street Expanded Loan Facility) and has added two more specifically for nonprofits: Nonprofit Organization New Loan Facility and Nonprofit Expanded Loan Facility. The difference between the two is that the Expanded Facility makes larger loans to qualified applicants, such as universities and hospitals.

Eligible banks accept applications and extend loans, but the Fed takes a 95% stake in them. The Main Street program, like the Paycheck Protection Act, is funded in part by CARES Act funds. It is designed to help keep organizations operating and able to retain and hire employees.

Rules for applicants

To qualify for a Main Street loan, nonprofit organizations must meet the following criteria:

  • Be tax exempt
  • Have a minimum of 10 employees
  • Been in operation for at least five years
  • Less than a $3 billion endowment
  • Total non-donation revenues equal to 60% of expenses or more, 2017 through 2019
  • 2019 operating margin of 2% or more
  • Cash on hand for 60 days
  • A debt repayment capacity of greater than 55%

The loans have a five-year term and interest rate of LIBOR plus 3%. Interest payments are deferred for one year. Loan size depends on the size and financial health of your nonprofit but amounts generally run from $250,000 to $300 million.

Is a Main Street loan right for your nonprofit?

Even if your nonprofit has never taken out a loan, it may be necessary now during the Coronavirus pandemic. You’ll need to think carefully about your nonprofit’s ability to repay any loan.

Questions

If you have questions or need help with the Main Street Lending Program, please contact us today to discuss with one of our experienced professionals.

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