The Federal Reserve Board is seeking comment by June 22, 2020 on proposed modifications to the Main Street Lending Program to include loans options for small and medium nonprofit entities organized under 501(c)(3) or 501(c)(19) of the Internal Revenue Code. Terms of the proposed Main Street nonprofit loans largely mirror those of the existing for-profit loans including the Fed’s 95% risk retention, and the loan terms including interest rate, deferral of payments, five-year term, and minimum loan size for new and expanded loans. The maximum loan size for Main Street nonprofit loans are the lesser of (i) $35 million for new loans, or $300 million for expanded loans; or (ii) the organization’s average 2019 quarterly revenue. Borrower eligibility is adjusted for nonprofit organizations to include: 50 to 15,000 employees; compliance with certain financial ratios relating to performance, liquidity, and debt to equity balance; operational history of at least five years; and total endowments under $3 billion. As with the all Main Street Lending Program loans, the applicant nonprofit must have been in sound financial condition before the COVID-19 pandemic. 

Comments are due by Monday, June 22, 2020. Interested parties should closely review the proposed terms and conditions described in the Fed announcement and provide comments before that date.  For additional information on the Main Street Lending Program, visit the Foley Insights blog on the program.

Foley assists clients in navigating the requirements of the Main Street loan facilities and other COVID-19 financing efforts.  Foley has created a multi-disciplinary and multi-jurisdictional team, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries.