June 18, 2020
On Monday (June 15), the Federal Reserve Board announced it is seeking public feedback on a proposal to expand its Main Street Lending Program to provide access to credit for nonprofit organizations, including hospitals. According to the announcement, “Loan terms under the proposed Main Street nonprofit loans, including the interest rate, deferral of principal and interest payments, and five-year term, are the same as for Main Street business loans. The minimum loan size is $250,000 while the maximum loan size is $300 million. Principal payments would be fully deferred for the first two years of the loan, and interest payments would be deferred for one year.”
Two loan options would be offered under the proposal and borrower eligibility requirements include:
- Minimum of 50 and maximum of 15,000 employees;
- Financial thresholds based on operating performance, liquidity, and ability to repay debt;
- An operational history of at least five years;
- A limit on endowments of no more than $3 billion; and
- Tax-exempt status under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code.
Feedback on the proposal will be accepted until Monday, June 22, and may be submitted via email here. The Main Street Lending Program was established with the approval of the Treasury Secretary and with $75 billion in equity provided by the Treasury Department from the CARES Act.