Bailey & Glasser LLP issued the following announcement on Aug. 5.
The Federal Reserve recently announced it was expanding access to the Main Street Lending Program (MSLP) for nonprofit organizations. On July 17, 2020, the Federal Reserve released term sheets for two new loan facilities under the MSLP: the Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF).
These Nonprofit Facilities provide thousands of nonprofits, including hospitals, museums, animal rights organizations, educational institutions, and social service organizations that were in sound financial condition prior to the COVID-19 pandemic access to MSLP loans.
Eligible Lenders Under the Nonprofit Facilities
Eligible Lenders under the Nonprofit facilities include US insured depository institutions, bank holding companies, and savings and loan holding companies. These are the same lenders under the for-profit facilities of the MSLP.
Eligible Borrowers Under the Nonprofit Facilities
Eligibility for loans under the NONLF and NOELF is limited to borrowers organized in the US and recognized as either a tax-exempt organization under IRC § 501(c)(3) or a tax-exempt veterans’ organization under IRC §501(c)(19). In addition, an Eligible Borrower is one that:
-has been in continuous operation since January 1, 2015;
-is not an Ineligible Business;
-meets at least one of the following two conditions: (i) has 15,000 employees or fewer or (ii) had 2019 annual revenues of $5 billion or less;
-has a minimum of 10 employees;
-has an endowment of less than $3 billion;
-has total non-donation revenues equal to or greater than 60% of expenses for the three-year period from 2017 to 2019;
has a ratio of adjusted 2019 earnings before interest, depreciation and amortization (EBIDA) to unrestricted 2019 operating revenue of at least 2%;
-has a ratio (expressed as a number of days) of (i) liquid assets at the time of the origination (of the upsized tranche in the case of NOELF loans) to (ii) average daily expenses over the previous year, equal to or greater than 60 days;
-at the time of the origination, has a ratio of (i) unrestricted cash and investments to (ii) existing outstanding and undrawn available debt, plus the amount of any loan under the Facility, plus the amount of any Centers for Medicare & Medicaid Services Accelerated and Advance Payments, that is greater than 55%;
-has significant operations in and a majority of its employees based in the US;
-does not also participate in any other Main Street Lending Program, the Primary Market Corporate Credit Facility, or the Municipal Liquidity Facility; and
-has not received specific support pursuant to Section 4003(b)(1)-(3) of Subtitle A of Title IV of the CARES Act (i.e., any Title IV programs for air carriers and related businesses, cargo air carriers, and businesses critical to maintaining national security).
Original source can be found here.
