Fed opens 'Main Street lending' to non-profits, eases terms from original plan

(Reuters) - The U.S. Federal Reserve on Friday opened its “Main Street” loan program to non-profits, allowing education, health, social service and other groups with as few as 10 employees to tap central bank funding.

The loan terms were broadened significantly from an initial proposal floated by the Fed in mid-June, including lowering the employee threshold from 50 workers and easing some revenue and operating margin requirements developed as a way to rate the financial health of non-profit organizations.

“Nonprofits provide vital services across the country and employ millions of Americans,” Federal Reserve Chair Jerome Powell said in a statement. “We have listened carefully and adapted our approach so that we can best support them in carrying out their vital mission during this extraordinary time.”

Main Street Lending Program

The Federal Reserve established the Main Street Lending Program (Program) to support lending to small and medium-sized businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic.

The Program operates through five facilities: the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), the Main Street Expanded Loan Facility (MSELF), the Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF).

Term sheets for each facility and frequently asked questions (FAQs) (PDF) providing more information regarding eligibility and conditions can be found below.

  • Operational Status. The MSNLF, MSPLF and MSELF are fully operational and ready to purchase participations in eligible loans that are submitted through the Main Street Lender Portal (Portal) by eligible lenders. To submit a participation funding request through the Portal, lenders must first complete lender registration. Registration instructions and the form loan participation agreement, form borrower and lender certifications and covenants, and other required form agreements can be found on the Federal Reserve Bank of Boston’s Main Street Lending Program Forms and Agreements website. The NONLF and NOELF are not yet operational. The Federal Reserve is currently working to create the infrastructure necessary to fully operationalize the Nonprofit Facilities.
  • Structure. To implement the Program, the Federal Reserve Bank of Boston has set up a special purpose vehicle (SPV) to purchase participations in loans originated by eligible lenders. Lenders will retain a percentage of the loans. U.S. businesses and nonprofit organizations may be eligible for loans if they meet the criteria laid out in the term sheets. Loans issued under the Program would have a five year maturity, deferral of principal payments for two years, and deferral of interest payments for one year. Eligible lenders may originate new loans (under MSNLF, MSPLF and NONLF) or increase the size of (or "upsize") existing loans (under MSELF and NOELF) made to eligible borrowers.
  • How do eligible borrowers apply? Small and medium-sized businesses interested in the Program can apply for Program loans by contacting an eligible lender. More information for eligible borrowers, including a listing of registered lenders, who are accepting new customers and have elected to be listed, can be found on the Federal Reserve Bank of Boston Information for Borrowers website. Once the NONLF and NOELF are operational, additional information about the application process for nonprofit organizations will be made available.
  • What documents should eligible lenders prepare? The Program loan participation agreement, form borrower and lender certifications, and other required form agreements for MSNLF, MSPLF and MSELF loans can be found on the Federal Reserve Bank of Boston’s Main Street Lending Program Forms and Agreements website. The Federal Reserve is not providing form loan documents for eligible lenders to use when making eligible loans to eligible borrowers. Loan documents related to any loans that are participated to the SPV must reflect the terms of the Program and must include the items set out in the loan document checklist contained in Appendix A of the Main Street FAQs (PDF). Once the NONLF and NOELF are operational, additional information about the application process for nonprofit organizations will be made available.

Main Street New Loan Facility (MSNLF)

Main Street Priority Loan Facility (MSPLF)

Main Street Expanded Loan Facility (MSELF)

Nonprofit Organization New Loan Facility (NONLF)

Nonprofit Organization Expanded Loan Facility (NOELF)

Main Street Lending Program Frequently Asked Questions (FAQs)

Main Street Lending Program Forms and Agreements

Additional information

Reports to Congress

Related Press Releases

Public Comments Received on MSNLF and MSELF Term Sheets (April 9, 2020 – April 30, 2020)

Contact

For general inquiries regarding the Main Street Lending Program please email: mslp@bos.frb.org

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