Federal Reserve Building

Previously, we reported that the Federal Reserve established the Main Street Lending Program to combat the economic issues caused by COVID-19. The Main Street lending program provides $600 billion to for-profit small and medium-sized businesses that make reasonable efforts to keep employees on the payroll, until now.

The Federal Reserve has released proposals of the nonprofit loan term sheets under the Main Street Lending Program. The proposed loans for nonprofits come in two forms – the Nonprofit Organization New Loan Facility and the Nonprofit Organization Expanded Loan Facility. These two are similar to the New Loan and Expanded Loan facilities under the Main Street Lending Program for for-profit businesses.

For lenders, the eligibility criteria have not changed. However, for nonprofit entities to qualify as borrowers, the requirements, as proposed, are different and tailored to nonprofit businesses.

Nonprofits are eligible for the Nonprofit Organization New Loan Facility and the Nonprofit Organization Expanded Loan Facility if the nonprofit:

  1. Is an Internal Revenue Code (IRC) 501(c)(3) tax-exempt organization or an IRC 501(c)(19) tax-exempt veterans’ organization;
  2. Was formed prior to January 1, 2015, and has remained in operation since that time;
  3. Has greater than 50 employees and (i) fewer than 15,000 employees or (ii) $5 billion or less in 2019 revenue;
  4. Has an endowment of less than $3 billion;
  5. Has a 2019 revenue from donations that are less than 30% of total 2019 revenues;
  6. Has a ratio of adjusted EBITDA to unrestricted 2019 operating revenue greater than or equal to 5%;
  7. Has a ratio (expressed as a number of days) of (i) liquid assets at the time of the origination to (ii) average daily expenses over the previous year, equal to or greater than 90 days;
  8. At the time of the origination, has a ratio of (i) unrestricted cash and investments to (ii) existing outstanding and undrawn available debt, plus the amount of any loan under the facility, plus the amount of any CMS Accelerated and Advance Payments that is greater than 65%;
  9. Is a U.S. based organization with the majority of its employees located in the U.S.;
  10. Has not received another loan under the Main Street Lending Program.

Borrowers must certify that they have a reasonable basis to believe that, as of the date of origination of the loan, and after giving effect to the loan, it has the ability to meet its financial obligations for at least the next 90 days and does not expect to file for bankruptcy during that period. Further, borrowers must comply with applicable restrictions in the CARES Act on compensation, stock repurchase, and capital contributions.

The proposed term sheets can be viewed here:



Closing Remarks

With the comment period for the new nonprofit facilities ending on June 22, 2020, revised term sheets should be expected in the coming weeks, and we will continue to provide updates as they occur. If you have questions about any of the Main Street Lending Program’s facilities, one of our attorneys can assist you. Please do not hesitate to contact the Wladis Law Firm. We will do our best to provide you with updates and will be available to answer questions as circumstances change. We may be reached at (315) 445-1700 or by e-mailing Attorney Jennifer Huse Granzow at jgranzow@wladislawfirm.com or by reaching out to your everyday firm contacts.