In a letter to the Federal Reserve, ASAE asked the Fed to expand the scope of the Main Street Lending Program to give 501(c)(6) associations the same access to credit during this difficult time.
ASAE filed comments with the Federal Reserve on June 22 requesting expansion of the Main Street Lending Program to include 501(c)(6) associations in addition to nonprofit groups.
The Main Street Lending Program, created to assist companies that were financially solvent before the coronavirus pandemic but now may need financing to maintain payroll and basic operations, will offer up to $600 billion in loans through participating financial institutions to U.S. businesses with up to 15,000 employees or with revenues up to $5 billion. The Fed sought feedback last week on a proposal to expand eligibility for Main Street to 501(c)(3) and 501(c)(19) nonprofit groups.
The Main Street program was developed to assist companies that may be too large to qualify for the Paycheck Protection Program, which is limited to businesses with fewer than 500 employees. Unlike the PPP, loans obtained through Main Street must be repaid. The loan terms are for five years, with payments deferred for the first two years. The Fed’s proposal to expand Main Street to assist nonprofits requires that the nonprofit be tax-exempt, have at least a 5-year history of operations, and endowments of no more than $3 billion.
“Nonprofit organizations are critical parts of our economy, employing millions of people, providing essential services to communities, and supporting innovation and the development of a highly skilled workforce,” Federal Reserve Chair Jerome Powell said in a press release. “Nonprofits provide vital services across the country and we are working to help them through this difficult time.”
In its comments on the proposed Main Street expansion, ASAE notes that 501(c)(6) associations also play a vital role in training the workforce, creating industry and professional standards and advancing the industries and professions that comprise the U.S. economy. Associations have been largely left out of congressional COVID-19 relief programs to date, including the PPP, ASAE said.
“[Associations] are already relied upon to help coordinate federal resources to combat the coronavirus pandemic, and they require staff to fulfill this duty,” ASAE wrote. “Associations now face, however, unprecedented financial losses from event cancellations. Most associations also anticipate further losses in dues revenues, as members address their own economically precarious circumstances by cutting expenses, including association membership. Without support, Section 501(c)(6) organizations will be unable to continue to provide the services on which so many rely.”
The deadline for comments on the Fed’s nonprofit proposal was June 22. The Fed said it intends to finalize term sheets for nonprofits very soon.