The Federal Reserve Bank (the Fed) on July 17 announced the expansion of the Main Street Lending Program to include 501(c)(3) and 501(c)(19) nonprofits.
The Nonprofit Organization New Loan Facility and Nonprofit Organization Expanded Loan Facility programs provide a minimum loan of $250,000 and a maximum loan of $300 million. The loans will be eligible for entities that:
- Have up to 15,000 employees or less than $5 billion in 2019 revenue.
- Have an endowment of less than $3 billion.
- Have been established before Jan. 1, 2015.
- Meet financial thresholds based on operating performance, liquidity, and ability to repay debt.
Principal payments will be deferred for the first two years, and interest will be deferred for one year. Loans are given five-year terms and have an interest rate of LIBOR (one or three months) + 3%.
Medical schools, academic medical centers, and faculty physician practices that meet the outlined requirements and are looking for increased cash flow could use this proposed loan program to access affordable capital.
The AAMC previously joined higher education community comments on the proposal, which advocated for expanded access to the Main Street Lending Program loans for universities, their affiliated hospitals, and physician practices [see Washington Highlights, June 26].