The program will now have two new loan options that will lend credit to many nonprofits, including educational institutions, hospitals, and social service organizations.
“Nonprofits provide vital services across the country and employ millions of Americans,” Fed President Jerome Powell said in a statement. “We have listened carefully and adapted our approach so that we can better support them in fulfilling their vital mission during this extraordinary time.”
Under the program, the Fed does not make loans directly to struggling businesses and nonprofits. Rather, it encourages banks to make loans by withdrawing the vast majority of loans from their balance sheets.
However, not all nonprofits will be eligible to take advantage of the funds. The Fed said the program is limited to organizations that were “in good financial shape” before the pandemic.
Nonprofits must also borrow at least $ 250,000 and cannot be overleveraged. Your ratio of cash, investments and other resources to debt must be greater than 55%.
Under the terms of the loans, interest payments are not due for one year and the principal is deferred for two years.
The expansion to nonprofit organizations was approved by the United States Secretary of the Treasury, Steven Mnuchin.
“Nonprofits, from colleges and universities to healthcare providers, community groups, and veterans organizations, play a vital role in our society and employ millions of hard-working Americans,” Mnuchin said in a statement.
The Main Street program, which took more than two months to take off, has a maximum credit capacity of $ 600 billion. It is financed with $ 75 billion in capital from the Treasury Department through the $ 2 trillion CARES Act.
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