Earlier this week, the Big “I” submitted comments to the Federal Reserve Board regarding the Main Street Lending Program. The comments addressed the Federal Reserve Board’s request for public feedback on a proposal to expand the program to provide access to credit for nonprofit organizations.
As a result of the Coronavirus Aid, Relief & Economic Security (CARES) Act, the Federal Reserve established the Main Street Lending Program to promote lending to a wide variety of small and medium-sized businesses that were in good financial condition before the onset of the COVID-19 pandemic. The program is authorized to provide $600 billion in financing to these businesses to help maintain operations and payroll.
The Main Street Lending Program offers four-year loans to eligible borrowers—ranging in size from $500,000 to $200 million—with floating rates and principal and interest payments deferred during the first year to assist businesses facing temporary cash flow interruptions. Lending is conducted through eligible lenders. The Federal Reserve does not extend loans directly to borrowers. It should be noted that unlike the Paycheck Protection Program, Main Street loans are not grants and cannot be forgiven.
In the program’s proposal for non-profits, they note that each organization must be a tax-exempt organization under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code. Comments submitted by the Big “I” urge the Federal Reserve Board to include Internal Revenue Code Section (Section) 501(c)(6) organizations, such as trade and professional associations, in the Federal Reserve’s Main Street Lending Program. The comments make clear that, “associations are facing unprecedented financial losses from event cancellations and other programmatic losses. Without support, Section 501(c)(6) organizations will be unable to continue to provide the important services on which so many rely.”
As the Trump administration continues to release guidance on the Main Street Lending Program and other COVID-19-related relief efforts, the Big “I” will make the most up-to-date government affairs information available on the coronavirus resource page and in the weekly News & Views e-newsletter.
Wyatt Stewart is Big “I” senior director of federal government affairs.