On Friday, the Federal Reserve Board announced that they were extending their Main Street Lending program to improve access to credit for nonprofits. This includes nonprofit educational institutions, hospitals, and social service organizations.
Main Street Lending Program
In April, the Fed launched the Main Street Lending Program to help for-profit organizations through the financial crisis. Businesses were able to receive new loans or increase loans from their financial institutions. The Fed funded 95% of the lending while the bank was responsible for the other 5%.
Public criticism helped change the program
Public criticism prompted the Fed to expand the program to include nonprofit organizations. Nonprofits were left out of the program’s initial launch even though they felt the brunt of the economic downturn. Over the last four months, nonprofits have seen the demand for services increase, and financial support decrease while trying to keep their doors open.
The Fed praises the nonprofit community
In response to the program’s expansion, Federal Reserve Chair Jerome H. Powell said, “nonprofits provide vital services across the country and employ millions of Americans." He continued, "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."
What are the changes?
Changes to the program include the number of minimum employees lowered from 50 to 10, “the limit on donation-based funding was eased, and several financial eligibility criteria were adjusted to accommodate a wider range of nonprofit operating models”, according to the Fed. The following chart outlines the program:
Photo credit: Michael Hart