Nonprofits are concerned that they may not be eligible for help under the new Main Street Lending Program, and they hope the Treasury will announce, perhaps as soon as Friday, another lending program aimed at midsize nonprofits.
The Federal Reserve’s Main Street Lending Program, announced April 9, is a $2.3 trillion effort to help small and midsize businesses and local governments weather the Covid-19 crisis. The program will back loans made by banks to businesses with up to 10,000 employees. It will help state and local governments by purchasing municipal bonds, among other provisions.
Nonprofits were hoping they would be eligible for loans backed by the program. However, the Federal Reserve was silent on whether nonprofits could participate, said David Thompson, vice president for public policy at the National Council of Nonprofits.
“Several law firms say yes; House Speaker Nancy Pelosi says no,” Thompson said.
The council and other advocates for nonprofits are pressing the Treasury Department to create a similar loan program dedicated specifically to nonprofits.
The council sent a letter to the Federal Reserve calling on the Fed and the Treasury to announce their intentions in terms of more help for nonprofits as soon as possible “to stem the furloughs of nonprofit employees while the needs for their services are growing exponentially.”
As with many elements of Congress’s hasty response to the coronavirus pandemic, including the $300 “universal deduction,” the details have often been unclear, with legislative experts disagreeing on their meaning. The $2 trillion stimulus law enacted March 27 authorized the Treasury to “endeavor” to create additional lending programs beyond the Paycheck Protection Program and other benefits outlined in the package that would help employers with up to 10,000 workers.
Meanwhile, news reports state that the $349 billion Paycheck Protection Program, which nonprofits are eligible for, has run out of money. Thompson says he hopes Congress will act fast to provide additional funding.
The Paycheck Protection Program provides forgivable loans for charities with no more than 500 employees, and nonprofit advocates say midsize nonprofits desperately need a similar lifeline.
A spokeswoman for the Federal Reserve said it has been accepting feedback on various aspects of the Main Street Lending program, including what types of organizations are eligible. The feedback period closes today, she said, adding that it hasn’t been determined yet when the program rules will be finalized.
The Chronicle sent an email to the Treasury Department’s press office seeking comment but had not heard back as of press time.
