Federal Reserve considers expanding “Main Street lending program” for nonprofits (COVID-19)

Federal Reserve considers expanding Main Street lending

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.

1000

Related content

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.

  • The minimum loan size would be $250,000 while the maximum loan size would be $300 million.
  • Principal payments would be fully deferred for the first two years of the loan, and interest payments would be deferred for one year.

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:

  • Minimum of 50 and maximum of 15,000 employees
  • Financial thresholds based on operating performance, liquidity, and ability to repay debt
  • An operational history of at least five years
  • A limit on endowments of no more than $3 billion

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 | ruthmadrigal@kpmg.com

Preston Quesenberry | +1 202 533 3985 | pquesenberry@kpmg.com

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal