The Federal Reserve Board this week announced it will be seeking public feedback on a proposal to expand its “Main Street lending program” to provide access to credit for certain nonprofit organizations.
As noted in the Federal Reserve’s release, the existing Main Street lending program is intended to provide support for small and medium-sized businesses. The proposed expansion would offer loans to small and medium-sized nonprofits that were in sound financial condition before the coronavirus (COVID-19) pandemic and could benefit from additional liquidity to manage through this challenging period. Only organizations that are tax-exempt under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code would be eligible for the proposed lending program.
Loan terms under the proposed Main Street nonprofit loans—including the interest rate, deferral of principal and interest payments, and five-year term—would be the same as for Main Street business loans.
Two loan options would be offered under the proposal. Borrower eligibility requirements for the proposed nonprofit facilities would be modified from the for-profit facilities to reflect the operational and accounting practices of the nonprofit sector and would include:
Comments and public feedback are requested as to how to make the proposed program as efficient and effective as possible. Comments are due by June 22, 2020.
For more information, contact a tax professional with KPMG’s Washington National Tax practice:
Ruth Madrigal | +1 202 533 8817 | firstname.lastname@example.org
Preston Quesenberry | +1 202 533 3985 | email@example.com
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