When the Federal Reserve Board announced its Main Street Lending Program, it was unclear whether nonprofits would be eligible. On April 30, 2020, the Feds clarified that nonprofits are not eligible for the Program and noted that “The Board recognizes the critical role that nonprofit organizations play throughout the economy and is evaluating a separate approach to meet their unique needs.”
In its FAQs, the Reserve Board answered the specific question of whether a nonprofit is eligible for the Program:
Are non-profit organizations eligible to borrow under the Program?
While non-profit organizations are not currently eligible under the Program, the Federal Reserve acknowledges the unique needs of non-profit organizations, many of which are on the front lines providing critical services and research to fight the pandemic. EBITDA is the key underwriting metric required for the MSNLF, MSPLF, and MSELF. The Federal Reserve recognizes that the credit risk of non-profit organizations, as a matter of practice, is generally not evaluated on the basis of EBITDA. The Federal Reserve and the Treasury Department will be evaluating the feasibility of adjusting the borrower eligibility criteria and loan eligibility metrics of the Program for such organizations.
We’ll continue to monitor the options available to nonprofits. In the meantime, our colleague Katie Eisler’s breakdown of loan options for businesses and nonprofits.