Federal Reserve opens up loan program to nonprofits

Nonprofits will be able to access loans through the Federal Reserve’s Main Street lending program to get financial help to offset declining revenue caused by the COVID-19 pandemic, the New York Times reports. 

The minimum employment threshold for nonprofits was lowered from 50 employees to 10 as a result of public comments submitted since the program launched in mid-June and lowered restrictions on the proportion of donation-based funding applicants could rely on. Tax-exempt organizations taking advantage of the lending initiative must take on at least $250,000 in loans. 

“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,” Federal Reserve Chair Jerome Powell said in a statement.

But the Main Street lending program has seen a slow rollout in the past month among businesses. Those in financial need are more likely to not be approved, but many companies who could qualify could more easily find more favorable borrowing terms. 

Larger nonprofits had previously endorsed inclusion into the loan program because another federal loan initiative created during the pandemic – the Paycheck Protection Program – was meant to favor smaller employers. Officials from the Federal Reserve took time to adjust the program to include organizations such as colleges, hospitals, social services organizations and other nonprofits, however, to ensure requirements were tailored appropriately to the nonprofit sector.