The Federal Reserve Board has modified the Main Street Lending Program to give nonprofit organizations, including educational institutions, hospitals and social service organizations, access to the program. Two new loan options are now available to certain nonprofit organizations that were in sound financial condition before the pandemic.

“Nonprofits provide vital services across the country and employ millions of Americans,” Federal Reserve Chair Jerome H. Powell said in a statement. “We have listened carefully and adapted our approach so that we can best support them in carrying out their vital mission during this extraordinary time.”

Authorized by the CARES Act to help small- and mid-sized businesses, the Main Street Lending Program is open to organizations that are tax-exempt under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code.

Nonprofits must have been in operation for at least five years and have an endowment of less than $3 billion. The Fed had released a proposal in June for nonprofit lending Based on public feedback, several requirements were eased or modified. Other criteria now include:

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

Like the program for small- and mid-sized businesses, the Main Street nonprofit loan options have five-year terms, interest deferred for one-year, principal deferred for two-years and 5 percent risk retention by the lender. Nonprofit New Loans have a minimum loan amount of $250,000 and a maximum loan of the lesser of $35 million or the borrower’s average 2019 quarterly revenue. Nonprofit Expanded Loans have a minimum loan amount of $10 million and a maximum loan of the lesser of $300 million or the borrower’s average 2019 quarterly revenue.

The Main Street Lending Program is administered by the Federal Reserve Bank of Boston.