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The Federal Reserve on Friday announced it has expanded its Main Street Lending Program to include nonprofit organizations as the nation’s economy struggles under the lingering constraints of the coronavirus pandemic.
“Nonprofits provide vital services across the country and employ millions of Americans,” said Fed Chairman Jerome Powell 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,” he added.
To qualify for the loan program, nonprofits such as educational institutions, hospitals and social services organizations need to have a minimum of 10 employees. The organizations must have qualified for tax-exempt status under IRS rules.
First announced in March, the Main Street program was designed to extend easy credit to small and medium-sized businesses.
The program took months to get up and running, however. The Wall Street Journal reported that disagreements between the Fed and Treasury slowed the start of the program. Fed officials generally favored easier terms that would increase the risk of the government losing money, while Treasury officials preferred a more conservative approach, people familiar with the process said.
The Fed disclosed late Thursday it had purchased the first $12 million in loans under the Main Street program this week.
The program works through banks, who make the loans with low interest rates and relatively easy payback terms. Banks have to hold on to 5% of the balance for loans made through the program.
