Federal Reserve FAQs for Non-Profit Loan Options

July 24, 2020

On Thursday, the Federal Reserve released a Frequently Asked Questions document providing additional information on the recently expanded loan Main Street Lending Program options for non-profit organizations, including hospitals.

The expanded loan options were announced late last week to provide greater access to credit for 501(c)(3) and 501(c)(19) nonprofit organizations, including hospitals. The two new loan options, Nonprofit New Loans and Nonprofit Expanded Loans, are available to organizations that were on sound financial footing prior to the pandemic and meet eligibility requirements that include having:

  • Minimum of 10 employees;   
  • Total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 to 2019;   
  • 2019 operating margin of 2% or more;   
  • 60 days cash on hand; and   
  • Debt repayment capacity – ratio of cash, investments and other resources to outstanding debt and certain other liabilities – of greater than 55%.

The Main Street Lending Program was established by the Treasury Secretary and includes $75 billion provided through the CARES Act. Under the expanded non-profit options, organizations may apply for five-year loans between $250,000.00 to $10 million at an interest rate of LIBOR + 3%. Interest payments are deferred for one year.