July 31, 2020

Liquidity Concerns Troubling Your Not-for-Profit? Consider the Main Street Lending Program

Main Street Lending Program

On July 17, the Federal Reserve Board officially expanded its Main Street Lending Program to make it easier for not-for-profit organizations to access its low-interest loan facilities. Organizations that do not qualify for the Paycheck Protection Program or that do not have an existing lending relationship may have been squeezed out of the federal relief efforts designed to offset the disruption from the COVID-19 pandemic. Proposed changes to the Main Street Lending Program (MSLP), announced in June, were more or less approved, with a few additional adjustments to minimum number of employees and rules surrounding donations.


Not-for-profits that are either Section 501(c)(3) (Charitable) or 501(c)(19) (Veterans) organizations can access one of the two not-for-profit-specific loan options through the Federal Reserve program: the Nonprofit New Loans and Nonprofit Expanded Loans, which enhance existing loans. Several changes were made to the eligibility criteria from the proposed expansion to the final requirements to lower potential barriers to the program (for a look at the details in the proposed changes, see our earlier coverage here).

For both the Nonprofit New Loans and Nonprofit Expanded Loans, organizations must meet these eligibility criteria:

  • Had 2019 annual revenues of $5 billion or less or has minimum of 10 employees but no more than 15,000 employees
  • Has an endowment of less than $3 billion
  • Total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019
  • Has a ratio of 2019 earnings before interest, depreciation, and amortization (EBIDA” to unrestricted 2019 operating revenue, greater than or equal to 2%
  •  At the time of loan origination, has a ratio of liquid assets to average daily expenses over the previous year, equal to or greater than 60 days
  • At the time of loan origination, has a ratio of unrestricted cash and investments to existing outstanding and undrawn available debt, plus the amount of any loan under the MSLP facility, plus the amount of any Centers for Medicare and Medicaid (CMS) Accelerated and Advance Payments, that is greater than 55%

Below is a summary of the new loan facilities.


Nonprofit New Loans

Nonprofit Expanded Loans

Minimum Loan Size


$10 million

Maximum Loan Size

The lesser of $35 million, or the borrower’s average 2019 quarterly revenue

The lesser of $300 million, or the borrower’s average 2019 quarterly revenue


At least 5 years, no prepayment penalties

Interest Payments

Deferred for 1 year (will be capitalized)


LIBOR + 3%

Lender Risk Retention


Principal Repayment

Principal deferred for two years; and repaid at 15% at the ends of years 3 and 4, and at 70% at the end of year 5

Endowment Cap

Less than $3 billion


Term sheets for the Nonprofit New Loans can be found here, and term sheets for the Nonprofit Expanded Loans can be found here.

For More Information

For more information about COVID-19 lending opportunities, please contact a member of our Credit Risk Services team. Additional COVID-19 related insights can be found in our COVID-19 Resource Center.

Related Reading

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