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Greater Access to Credit for Nonprofits Through Main Street Lending Program

The Federal Reserve Board has modified the Main Street Lending Program to provide greater access to credit for nonprofit organizations, such as educational institutions, hospitals, and social service organizations, that were in sound financial condition before the pandemic hit, and also eased the requirements that nonprofits need to fulfill to participate in the Main Street Lending Program.

To qualify for the new loans, organizations must be a 501(c)(3) and meet the following criteria:

  • Minimum employees 10 (previously 50).
  • Total nondonation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019 (previously 70% of revenues).
  • 2019 operating margin of 2% or more (previously 5%).
  • Current days cash on hand 60 days (previously 90 days).
  • Current debt repayment capacity — ratio of cash, investments, and other resources to outstanding debt and certain other liabilities — of greater than 55% (previously 65%).

The Main Street not-for-profit loan terms generally mirror those for Main Street for-profit business loans, including:

  • The interest rate (LIBOR + 3%).
  • Principal and interest payment deferral (principal deferred for two years; years 3–5: 15%, 15%, and 70%).
  • Five-year term.
  • Minimum and maximum loan sizes.

For more information or discuss options for your nonprofit organization during these difficult times, please reach out.