Federal Reserve Public Comments 3 — Main Street Lending Program Nonprofit Organizations Comments
Summary
A table of public comments on the Federal Reserve's Main Street Lending Program for nonprofit organizations, with columns for received date, name, affiliation and comment. The comments shown come from, among others, the Florida State Alliance of YMCAs, Nebraskans for the Arts and Arts North Carolina. They ask the Federal Reserve to reduce the 5% EBIDA requirement to zero, remove the 50-employee minimum, and eliminate the limit that revenue from donations be less than 30%. Several comments ask for clarification of the employee-retention term "reasonable efforts", and the Arts North Carolina comment asks Congress to ensure that mid-sized nonprofits have access to loan forgiveness.
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“Federal Reserve Public Comments 3 — Main Street Lending Program Nonprofit Organizations Comments.”
Original at www.federalreserve.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/federal-reserve-public-comments-3-pdf-www-federalreserve-gov-06fef8016-d998323cd1/
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Main Street Lending Program
Nonprofit Organizations Comments
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
We are also concerned that certain eligible loan features are too onerous for nonprofit organizations and are less favorable than those offered
in other government programs. Specifically, the interest rate of LIBOR plus 300 basis points is too high. In addition, the imposition of loan
origination and service fees adds to the cost. Finally, the 70% balloon payment at the end of the fifth year of the loan would be difficult for many
nonprofits, unless provided an opportunity to refinance such loans at low rates.
Recommendation: Revisit the loan terms including interest rate and balloon payments and recommend the lowest permissible rate such as the
0.5% rate initially proposed for PPP loans. We also urge some flexibility in the balloon payment requirement to afford the opportunity for
renegotiation. Extending the 5-year amortization to seven years could lessen the balloon payment. We request that borrowers have access to
engage with derivatives (change to a fixed rate) without the minimum swap requirements.
3. The Ratio of Adjusted 2019 Earnings before "EBIDA" Should Be Revised
In the "Draft for Public Consultation," one of the eligibility criteria for borrowers is that they must have "a ratio of adjusted 2019
earnings before interest, depreciation, and amortization (EBIDA) to unrestricted 2019 operating revenue, greater than or equal to 5%."
(#6) In the context of nonprofit operations, this threshold is too high and would make many, if not most, nonprofits ineligible based on these
criteria alone, which seems written more in the context of for-profit businesses as opposed to nonprofit organizations.
It may be prudent and necessary to have a positive ratio of adjusted earnings; however, nonprofits generally run on a small margin, both out of
necessity and also so as to not leave excess surpluses that could be used for fulfilling their missions. Moreover, at times a nonprofit may have
a planned and manageable deficit as part of a strategic plan-a negative ratio at one isolated point is not always an indication of instability.
Furthermore, the footnotes for #6 clarify that "The Eligible Lender should calculate operating revenue as unrestricted operating revenue,
excluding funds committed to be spent on capital." Many nonprofits have "restricted revenue" through grants and contracts
built into their operating budgets. Excluding this revenue would compound the problem of meeting the 5% ratio. Although it would be sensible
to exclude contributions raised for a "capital campaign," excluding other capital funds included in an annual budget for maintenance
and planned upgrades would further decrease the required ratio.
Recommendation: The 5% requirement should be reduced to zero, if not eliminated. In addition, a statement of explanation of a deficit should
be allowed so that a negative ratio does not mean automatic ineligibility for a nonprofit borrower. Finally, further clarification on the calculation
methodology-in the context of nonprofit operating budgets-is needed in regard to both restricted funding from grants in annual operating
budgets, as well as capital funds for improvements that are part of an annual operating budget. This clarification would allow noted revenues to
remain in calculation to ease the restriction and not further restrict eligibility.
4. "Reasonable Efforts" Regarding Employee Retention Require Further Clarification
The description of "Retaining Employees" in the draft term sheet requires refinement if the Federal Reserve expects nonprofits to
take advantage of this facility. We endorse the analysis of the National Council of Nonprofits on the issue of employee retention, and
recommend the following:
Recommendation: "Reasonable efforts" should be interpreted in the totality of the circumstances, taking into consideration not only
the general economic environment in the community or communities in which the borrower operates, but also factors such as workforce,
fundraising ability, revenue-generating activities, and overall demand for the services and programs the organization provides. One option
would be to add the qualifier "mission-based" before "reasonable efforts."
Recommendation: Further refine the terms "maintain its payroll" and "retain its employees" are vague, and make clear
that nonprofits participating in the Main Street loan program generally should endeavor to pay staff at the same or increased income levels and
should act in good faith to keep staffing levels (measured on the basis of full-time equivalents) at the same or increased levels, both for the
duration of the loan. It is also important that the loan documents expressly state that the employee retention provision begins on the date that
loan funding is received by the borrower rather than at an earlier date.
Recommendation: Adopt the safe harbors of other loan programs and state clearly that nonprofit borrowers will not be penalized under the
employee retention provision for the decision of employees to decline offers of rehire, or for those who are fired for cause, voluntarily resign, or
voluntarily request a reduced schedule during the time that the loan is outstanding.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
5. Limitation of 50-Employee Minimum Should Be Removed
The proposed nonprofit loan facility imposes a size minimum that is not imposed in the Main Street Loan Facilities for for-profit businesses.
There is no explanation why the Federal Reserve is proposing that nonprofits with fewer than 50 employees should not be eligible for Main
Street loans for which their small business counterparts of equal size could secure lending support.
Recommendation: Remove the 50-employee floor.
6. The Fed's Proposal to Limit Loans to Mid-Size Nonprofits with Less than 30% of Revenue from Donations Disqualifies Many in
Charitable Sector
The Federal Reserve's criteria that organizations must have revenues from donations that are less than 30% disqualify many charities.
Overall, this loan facility seems more geared to educational institutions and nonprofit hospitals, but not most charitable organizations.
Recommendation: Eliminate the requirement that no more than 30 percent of an organization's 2019 revenues come from donations.
7. Additional Recommendations and Requests for Clarification
Y-USA respectfully requests clarification of the following issues in the final notice.
Endowment: What resources should be included in endowment calculations? Does it include restricted endowments? Does it extend to include
cash on hand?
Collateral: Flexibility on collateral is requested. The loan should be able to be approved with no more than 50% Loan to Value (LTV) if
collateral is needed.
Other Debts: The proposal requires that borrowers, "refrain from repaying the principal balance of, or paying any interest on, any debt
until the Eligible Loan is repaid in full, unless the debt or interest payment is mandatory and due." We request that this exclude lines of
credit and other debt that are assumed to provide financial liquidity related to the impact of COVID-19.
Conclusion
The Florida State Alliance of YMCAs appreciates the opportunity to submit these comments to the Federal Reserve about the Mainstreet
Lending Program for Nonprofits, which, in its proposed form, seems aimed more at nonprofits such as hospitals and institutions of higher
education than at nonprofits like local YMCAs.
Thank you for considering these comments and recommendations. We stand ready to work with you to strengthen the Mainstreet Lending
Program and give YMCAs the resources to help communities across America get through this crisis and promote a vibrant and equitable
economic recovery.
Sincerely,
Lynne Wilcox
CEO/President
Florida State Alliance of YMCAs
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Nebraskans for the Arts appreciates the opportunity to comment on the proposal to expand its Main Street Lending Program to provide access
to credit for nonprofit organizations - our comments are specifically related to arts and cultural nonprofits.
Nebraskans for the Arts is a statewide organization that advocates for policies that benefits the arts and arts education.
Many 501(c)(3) arts and cultural organizations were in sound financial condition before the coronavirus pandemic. Their situations were
dramatically impacted by COVID-19. The impact in Nebraska alone includes:
A $2,070,473 total financial impact to date, with a median financial impact per arts organization of $9,000 to date, according to results
collected by the Americans for the Arts' ongoing survey, "The Economic Impact of Coronavirus (COVID-19) on the Arts and Cultural
Sector." This report estimates there has been a national impact of $6.7 billion overall and $38,000 median per-organization impact due to
lost income, attendance, or other impactsl.
The "COVID-19 Impacton Nebraska Businesses: Nebraska Business Response Survey Report" lists "Arts, Entertainment
and Recreation" as the industries reporting the largest negative impacts from coronavirus, at 97.19% of 301 respondents. 75.5% of
respondents in this industry sector list "financial impact on operations and/or liquidity and capital" as one of their top 3 concerns.2
Providing access eligibility to nonprofits has the potential to provide significant relief to small- and medium-sized organizations. This will
support the intent expressed by Congress in the CARES Act that the program should provide liquidity support to all industries through federally
guaranteed lending. This action will help arts and cultural nonprofits weather the current crisis until they can fully operate again.
One concern that we recommend be addressed is the minimum size eligibility to apply to the Main Street Lending Program. The current
minimum of greater than 50 employees makes the vast majority of Nebraska businesses, both private and nonprofit, ineligible to apply for this
program - particularly in rural and smaller communities. For example, 60% of arts and cultural organizations in Nebraska have 5 FTE or fewer
employees. We recommend the minimum size be reduced to greater than 1 employee to increase eligibility to participate in this program.
We respectfully urge the Federal Reserve to approve the Nonprofit Organization Expanded Loan Facility to facilitate lending to nonprofit
Staff Group - Main organizations by eligible lenders under the Main Street Lending Program. Thank you for your consideration of these comments.
Street Lending
Program - Nonprofit doug@nebrask 1 https: //www.americansforthearts.org/by-topic/disaster-preparedness/the-economic-impact-of-coronavirus-on-the-arts-and-culture-sector
Organization PIO (Email 6/19/2020 ansforthearts.or Nebraskans for 2 https : //issuu.com/cba_uno/docs/covid-19_nebraska_business_survey_report-2?fr=sMmE1MTE5Mjg1OQ
Facilities from Web) 12:00:00 AM Zbylut Douglas 9 the Arts
Staff Group - Main As a medium-sized private institution of higher education, the expansion of the Main Street Lending Program would provide St. Edward's
Street Lending (SUE) with access to low-cost capital. The terms of this program far exceed what we are able to negotiate with our commercial bank in the
Program - Nonprofit form of a line of credit. We expect the impact of COVID to be long lasting, spanning greater than one fiscal cycle. The terms of the MSLP allow
Organization PIO (Email 6/20/2020 kimkvaal@sted St. Edwards for a multi-year repayment that would not be overly onerous for SEU. Please pass the proposed changes as soon as possible.
Facilities from Web) 12:00:00 AM Kvaal Kimberly wards.edu University
Two proposed requirements will eliminate many arts and cultural orgs.
If program is aimed at small to medium sized 501 (c)3, then please:
A) Lower the required minimum number of employees or accept employee headcount. If employees are only counted as FTE, then requiring 50
this will leave out many smaller nonprofits that employ large numbers of part time staff. 15 FTE or 30 headcount would be reasonable.
B) Increase % of donations allowed. Arts and Cultural orgs actively try to achieve a 50/50 balance between "sales" and
Staff Group - Main "donations" to ensure stability. Less than 50% donations leaves an Arts org. too much at the whim of one unpopular show. Plus, the
Street Lending costs of production far exceeds ticket purchase capacity of the general public. Without robust donations to underwrite costs, ticket prices would
Program - Nonprofit John.purdie@ be unaffordable for the vast majority of people. Fewer sold tickets would further raise prices, and they'd quickly spiral beyond
Organization PIO (Email 6/20/2020 Mountbakerthe Mount Baker anyone's reach.
Facilities from Web) 12:00:00 AM Purdie John atre.com Theatre
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Arts North Carolina is the state's advocacy organization for the arts. Our primary goal is to promote public funding and policy that benefits
and supports nonprofit arts organizations and comprehensive arts education.
Arts North Carolina appreciates the opportunity to submit comment to the Federal Reserve about the Nonprofit Organization Loan Facilities.
This proposal is aimed more at transactional nonprofits such as hospitals and institutions of higher ed than at nonprofits like Arts North
Carolina that have a larger reliance on donations from the public to support their missions. Indeed, many nonprofits pride themselves on
offering their services at no charge. Recognizing that their business models are different, even if both types of charities are inherently
organized around a public mission, many of the financial requirements included in this proposal simply are not applicable to organizations that
rely on donations. With that in mind, Arts North Carolina respectfully requests the Federal Reserve to address the concerns and proposed
changes outlined below.
1. Congress Must Act to Ensure Mid-Sized Nonprofits are Eligible for Loan Forgiveness
Congress must ensure that mid-sized nonprofits have access to loan forgiveness. While it is a welcome development to see the Federal
Reserve making its Main Street lending program available to some nonprofits, this assistance still falls short of what is most needed by
nonprofit organizations - a provision that makes these loans forgivable.
In this critical time, nonprofits have stepped up to meet the unprecedented level of need in our country due to the COVID-19 pandemic. Even
though they face many of the same economic challenges as other industries, nonprofits are not shutting down. Rather, they are straining to
meet increasing demands in our communities on the frontlines, caring for the sick, feeding families, and keeping our communities connected.
Furthermore, they will play an integral role as our nation recovers - providing child care, job training, and other core supports.
Charitable nonprofits of all sizes and focus areas are struggling to maintain mission-critical operations despite enormous economic challenges.
Data released by Independent Sector shows that nonprofits with between 500 to 5,000 employees, key to scaling relief efforts across the
nation, have been severely impacted by this health and economic crisis. When asked "What types of additional assistance would be most
helpful to your organization?" organizations overwhelmingly (92% of responses) suggested government support in the form of forgivable
loans. Smaller nonprofits throughout the country have been hit equally hard.
Nonprofit organizations need funding so they can continue to meet the needs of their communities. Many charitable organizations do not have
steady streams of commercial income and have little capacity for loan and interest repayment. Furthermore, nonprofits are the third largest
employment sector and many hope to hire more workers as their organizations recover. America cannot afford to leave out such a vital part of
the economy.
Recommendation: Congress must recognize the vital services nonprofits provide to communities and the economy by including loan
forgiveness, in the next round of COVID-19 relief legislation
2. The Fed's Proposal to Limit Loans to Mid-Size Nonprofits with Less than 30% of Revenue from Donations Disqualifies Many in
Charitable Sector
The Federal Reserve's criteria that organizations must have revenues from donations that are less than 30% disqualify many charities,
including Arts North Carolina Overall, this loan facility seems more applicable to for-profit entities, as well as educational institutions and
nonprofit hospitals, but not most charitable organizations.
We raise money and receives donations from the public, foundations, corporations and others to fund our work and we do not receive a
significant amount of revenue through direct services. Charitable organizations play a fundamental role in strengthening civil society. Our
organizations provide vital services for the creative community in North Carolina and the nation, and pride ourselves on the donations we
receive rooted in the trust and support that the public has of the sector.
Recommendation: Eliminate the requirement that no more than 30 percent of an organization's 2019 revenues come from donations, and
instead make 501(c)(3) organizations that are otherwise meet the employee size are eligible.
Staff Group - Main
Street Lending 3. The Fed Needs to Make Loan Terms More Favorable to Charitable Organizations
Program - Nonprofit The draft Nonprofit Loan Facility imposes certain liquidity, asset, and reserve requirements that are not required in Main Street New Loan
Organization PIO (Email 6/20/2020 nate@artsnc.or Arts North Facilities available to for-profit businesses.
Facilities from Web) 12:00:00 AM McGaha Nate 9 Carolina
Main Street Lending Program
Nonprofit Organizations Comments
Event Title 1
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Nonprofit organizations typically provide services with low-profit margins. Indeed, social service organizations report an average aggregate
margin of 1.5%. According to a recent report by Seachange Capital Partners, the median social services nonprofit has a margin of 1.0%,
receives 3.6% of its revenue from philanthropy (including investment income), has total financial assets (including endowments and other
assets that are subject to legal restrictions) equal to 1.9 months of expenses, and operating reserves of less than one month of expenses. Less
than 20% of large nonprofits have 6 months or more of operating reserves, a widely accepted standard for "financial strength" for
nonprofits. Social services organizations are the most fragile, with fewer than 10% reaching this standard.
The statistics above should not be viewed as an indictment of the efficiencies or management policies of nonprofits. It is important to note that
the vast majority of social service nonprofit funding comes from government grants contracts, recognizing the key role such organizations play
in serving the most vulnerable. Numerous studies confirm that government funding seldom covers the full cost of providing contracted work,
which inhibits nonprofits from accumulating reserves through surpluses. In many instances, government grant/contract work creates cash-flow
challenges since it is paid after the work has been completed and can be subject to significant delays in payment.
Recommendation: Recognizing the unique nature of nonprofit operations and their importance in continuing to provide vital services as
partners on the front lines of the COVID-19 crisis, we urge the Federal Reserve to eliminate borrower requirements 7 and 8. If this is not
possible, we alternatively ask that the requirements be lessened significantly to reflect the economic realities of nonprofit operations, for
example by requiring only 30 days cash on hand, and bringing the loan origination ratio of 40-50% (down from 65% as proposed).
We are also concerned that certain eligible loan features are too onerous for nonprofit organizations and are less favorable than those offered
in other government programs. Specifically, the interest rate of LIBOR plus 300 basis points is significantly higher than that offered for
Paycheck Protection Program ("PPP") Loans (1.0%) and that for Economic Injury Disaster Loans (2.75%). In addition, the
imposition of loan origination and service fees adds to the cost under the Nonprofit Facility. Finally, the notion that nonprofits would be faced
with a 70% balloon payment at the end of the fifth year of the loan would be off-putting for many nonprofits. Nonprofits with existing loans with
balloon payments are usually provided an opportunity to renegotiate such loans at prevailing market rates.
Recommendation: We urge that the loan terms including interest rate and balloon payments be revisited and recommend the lowest
permissible rate such as the 0.5% rate initially proposed for PPP loans. In addition, we urge some flexibility in the balloon payment requirement
to afford the opportunity for renegotiation. If the 5-year amortization were extended to 7 years, this could lessen the balloon payment. We
request that the borrower have access to engage with derivatives (change to a fixed rate) without the minimum swap requirements.
4. The Ratio of Adjusted 2019 Earnings before ":EBIDA" Should Be Revised
In the "Draft for Public Consultation," for both the Nonprofit Organization New Loan Facility and the Nonprofit Organization
Expanded Loan Facility, one of the eligibility criteria for borrowers is that they must have "a ratio of adjusted 2019 earnings before
interest, depreciation, and amortization ("EBIDA") to unrestricted 2019 operating revenue, greater than or equal to 5%." (#6)
In the context of nonprofit operations, this threshold is too high and would make many, if not most, nonprofits ineligible based on these criteria
alone, which seems written more in the context of for-profit businesses as opposed to nonprofit organizations.
It may certainly be prudent and necessary to have a positive ratio of adjusted earnings; however, nonprofits generally run on a small margin,
both out of necessity and also so as to not leave excess surpluses that could be used for fulfilling their missions. Moreover, at times a nonprofit
may have a planned and manageable deficit as part of a strategic plan-a negative ratio at one isolated point is not always an indication of
instability.
Furthermore, the footnotes for criteria #6 clarify that "The Eligible Lender should calculate operating revenue as unrestricted operating
revenue, excluding funds committed to be spent on capital." Many nonprofits have "restricted revenue" through grants and
contracts built into their operating budgets. Excluding this revenue would compound the problem of meeting the 5% ratio. Although it would be
sensible to exclude contributions raised for a "capital campaign," excluding other capital funds included in an annual budget for
maintenance and planned upgrades would further decrease the required ratio.
Recommendation: The 5% requirement should be reduced to zero, if not eliminated. In addition, a statement of explanation of a deficit should
be allowed so that a negative ratio does not mean automatic ineligibility for a nonprofit borrower. Finally, further clarification on the calculation
methodology -in the context of nonprofit operating budgets- is needed in regard to both restricted funding from grants in annual operating
budgets, as well as capital funds for improvements that are part of an annual operating budget. This clarification would allow noted revenues to
remain in calculation to ease the restriction and not further restrict eligibility.
Page 55 of 300
Main Street Lending Program
Nonprofit Organizations Comments
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
5. "Reasonable Efforts" Regarding Employee Retention Require Further Clarification
The description of "Retaining Employees" in the draft term sheet requires refinement if the Federal Reserve expects nonprofits to
take advantage of this facility. We endorse the analysis of the National Council of Nonprofits on the issue of employee retention, and
recommend the following:
Recommendation: "Reasonable efforts" should be interpreted in the totality of the circumstances, taking into consideration not only
the general economic environment in the community or communities in with the borrower operates, but also factors such as workforce,
fundraising ability, revenue-generating activities, and overall demand for the services and programs the organization provides. One option
would be to add the qualifier "mission-based" before "reasonable efforts."
Recommendation: The terms "maintain its payroll" and "retain its employees" are vague and need further refinement.
We ask the Federal Reserve to make clear that nonprofits participating in the Main Street loan program generally should endeavor to pay staff
at the same or increased income levels and should act in good faith to keep staffing levels (measured on the basis of full-time equivalents) at
the same or increased levels, both for the duration of the loan. It is also important that the loan documents expressly state that the employee
retention provision begins on the date that loan funding is received by the borrower rather than at an earlier date.
Recommendation: We ask that the Federal Reserve adopt safe harbors of other loan programs and state clearly that nonprofit borrowers will
not be penalized under the employee retention provision for the decision of employees to decline offers of rehire, or for those who are fired for
cause, voluntarily resign, or voluntarily request a reduced schedule during the time that the loan is outstanding.
6. Limitation of 50-Employee Minimum Should Be Removed
The term sheet for the proposed nonprofit loan facility imposes a size minimum that is not imposed in the Main Street New, Priority, or
Expanded Loan Facilities for for-profit businesses. There is no explanation why the Federal Reserve is proposing that nonprofits with fewer
than 50 employees should not be eligible for Main Street loans for which their small business counterparts of equal size could secure lending
support.
Many of the nonprofits in our network are on the frontlines of this pandemic, working with fewer than 50 employees to address immediate and
growing needs. These vital organizations would be arbitrarily excluded from important loan program.
Recommendation: The 50-employee floor should be removed.
7. Additional Recommendations and Requests for Clarification
Arts North Carolina respectfully requests the Federal Reserve clarify the following issues in its final expansion notice.
Endowment: What resources should be included in endowment calculations? Does it include restricted endowments? Does it extend to include
cash on hand?
Collateral: Flexibility on collateral is requested. The loan should be able to be approved with no more than 50% Loan to Value (LTV) if
collateral is needed.
Other Debts: The proposal requires that borrowers, "refrain from repaying the principal balance of, or paying any interest on, any debt
until the Eligible Loan is repaid in full, unless the debt or interest payment is mandatory and due." We request that this exclude lines of
credit and other debt that are assumed to provide financial liquidity related to the impact of COVID-19.
Arts North Carolina and many of the organizations we represent need access to financial assistance and low interest loans in order to survive
this crisis. We strongly urge you to consider the recommendations above so that this program will be better able to serve the nonprofit
community.
Page 56 of 300
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Expanding access to Main Street Lending Program for non-profit organizations is welcome news and much appreciated. However limiting this
access to organizations that are 501c3 or 501c19 is disappointing,. Many nonprofit organizations (in particular Professional Associations) have
a 501 c6 tax exempt designation. Associations have been particularly hard hit financially by COVID-19 due to the cancelation of their in-person
meetings. The in-person meetings and conferences are a major source of revenue for these nonprofit Associations and the lost revenue they
are experiencing is creating tremendous financial hardship. While some are able to replicate the educational component of the meeting via a
virtual platform, the lost revenue from vendor support cannot be replaced. I strongly urge you to consider making these Main Street loans
available to nonprofit organizations that have a 501 c6 tax status.
Your consideration of this recommendation is appreciated.
Bill Finerfrock
Co-Founder and Executive Director
Coronavirus PIO (Email 6/20/2020 Capitol National Association of Rural Health Clinics
(COVID-19) from Web) 12:00:00 AM Finerfrock Bill bf@narhc.org Associates, Inc.
The maximum of 30% from donations/ giving would appear to adversely impact vital social service agency borrowers the most for reasons that
are not clear or risk driven. They are on the front lines responding to COVID-19 and should not be broadly excluded due to the parameters. It
appears tailored around institutional borrowers vs human service non profits that most need it (given that institutional borrowers with large
endowments are eligible).
Also, it seems unnecessary to have the minimum employee count as there are likely non profits that are solely eliminated due to this that would
otherwise be eligible (and it reinforces the focus being on large institutional borrowers that may not need it).
Staff Group - Main
Street Lending To lower default risk, it could make sense to have a 2-3 year I/O period and then a slightly longer term out option (7-10 year total length). This
Program - Nonprofit program is effectively funding losses potentially and it could make sense to better position them (requiring 70% in the final year greatly
Organization PIO (Email 6/20/2020 lpingel@colum increases the default probability).
Facilities from Web) 12:00:00 AM Pingel Luke biabank.com
ABSOLUTELY NOT. Our tax dollars already fund non profits through grants and endowments. This is yet another disingenuous boondoggle for
Staff Group - Main your political friends in the non profit sector. In fact, why are we, as a capitalist country, bailing out any industry? In capitalism there is no such
Street Lending thing as "too big to fail". If a business fails, it should be allowed to do just that. Another will inevitably take its place. Capitalism is
Program - Nonprofit Personal Email dog-eat-dog. Your continuous subsidizing and bailing out of corporations is un American. This is yet another shameless money grab for
Organization PIO (Email 6/20/2020 Address
corporate America, to which you are, yet again, a party.
Facilities from Web) 12:00:00 AM Andrews Rose Mondelez
I believe that the arts and humanities form the cultural infrastructure of a civil society,
and therefore a politically healthy community. A democracy cannot flourish without
them. And arts and culture non-profits have become essential economic infrastructure, working in an inextricable partnership with tourism.
Tourism functions as the central nervous system that introduces and moves people to/through the great places and experiences we offer, and
invites them to drop anchor here.
Cultural tourism -travel directed toward experiencing the arts, heritage and special character of a place- simply heaps value on the natural gifts
of a community and state, increases the "cool" factor and broadens the target audience, gives them reason to linger.
Staff Group - Main We profit from the arts not only in ways easily measured like economic impact with increased annual revenue to our state and communities,
Street Lending and to associated businesses. But arts and tourism in partnership, activated where you live and work, generates a magnetic field that helps to
Program - Nonprofit Personal Email draw in and develop and anchor a talented workforce, and provides infrastructure that lends resilience to the tourism economy, no matter the
Organization PIO (Email 6/20/2020 Address weather.
Facilities from Web) 12:00:00 AM Lawton Barbara State of Wl
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
The Federal Government has initiated numerous economic programs to alleviate the economic hardships brought on by the Covid-19
pandemic. There are programs benefitting individuals in a meaningful manner. There are programs to benefit the small business community
and small not-for-profits. Unfortunately one sector of the economy has been conspicuously omitted from meaningful economic supports. The
mid-size not-for-profit although enjoy some incentive programs to aid them nonetheless these programs are to small to benefit them in a
meaningful manner.
The Main Street lending Program is an ideal program that fits the mid-size organization.
It is engineered to offer relief tied to a formula based on the size of an organization. This offers the built in flexibility to both the Federal
Staff Group - Main Government and the organization to allow appropriate relief relative to its size.
Street Lending
Program - Nonprofit Mid-size organizations provide a critical service to society, alleviate the burden of government and are an economic resource in their respective
Organization PIO (Email 6/21/2020 J. Gliksman communities. Accordingly they are well deserving of the relief offered by the Main Street Lending Program.
Facilities from Web) 12:00:00 AM Gliksman Joseph yg@bgcpa.com CPA PC
Sadly the guidelines of this program are unnecessarily limiting and without recognition that a 501c3 of any size is quite important. Further,
501 c3 of all sizes, especially the more lean and smaller ones that serve their respective communities, deserve the same rights, privileges and
Staff Group - Main opportunities to participate in this program without regard for staff size.
Street Lending The National
Program - Nonprofit Society of Please reconsider the spirit, intent and goal of this program that is does not discriminate based on head count. We have all been impacted by
Organization PIO (Email 6/21/2020 mandurano@n Collegiate COVID-19 and we all need help to continue to serve our industries.
Facilities from Web) 12:00:00 AM Mandurano Steven scs.org Scholars
POLICY
Economic Data - Personal Email STUDIES We are an ngo publisher and like many small publishers outsource our art, manufacturing, etc. n The 50 employee requirement means that
E.2 - Terms of PIO (Email 6/21/2020 Address ORGANIZATIO these contractors cannot be counted and we cannot meet the 50 requirement. It deprives all the contractors, also small, of their income.
Business Lending from Web) 12:00:00 AM Rich Paul N
Staff Group - Main
Street Lending
Program - Nonprofit dthompson@co National By way of email to regs.comments@federalreserve.gov I have this evening submitted as an attachment Comments of the National Council of
Organization PIO (Email 6/21/2020 uncilofnonprofit Council of Nonprofits regarding the proposed Main Street Lending Program for nonprofit organizations - NONLF and NOELF.
Facilities from Web) 12:00:00 AM Thompson David s.org Nonprofits
Event Title 1
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
On behalf of the Healthcare Association of New York State, thank you for the opportunity to provide comments on the Federal Reserve
Board's recent proposal to expand its Main Street lending program to provide access to credit for nonprofit organizations, including
hospitals. HANYS is the only statewide hospital and continuing care association in New York, representing nonprofit and public hospitals,
health systems, nursing homes and home care agencies. As such, HANYS is pleased to support the opportunity for our members to access
much-needed credit through the Main Street lending program.
Hospitals and health systems across the United States, and particularly in New York, play a vital role in improving local economies and
communities. They provide critical healthcare and emergency services; contribute vital resources to communities through jobs, tax revenue
and capital improvements; and are among the largest employers across the state. Unfortunately, the COVID-19 pandemic has taken a
staggering financial toll on hospitals across the state due to the cancelation of non-emergent procedures, stay-at-home orders and significant
increases in expenses to meet the demands of COVID-19.
As has been reported, hospitals across New York state have identified revenue losses as their number one financial concern during this
pandemic. Our members have reported that their revenue crashed by more than 40% during the last half of March alone. Despite receiving
direct funding through the Department of Health and Human Services Provider Relief Fund established in the CARES Act, our member
hospitals continue to incur major expenses related to increasing bed capacity, purchasing personal protective equipment and hiring needed
staff to treat COVID-19 patients. In addition, despite resuming non-emergent procedures, patients have been reluctant to go to the hospital for
services because of concern for their health and safety, as misplaced as that fear may be.
HANYS appreciates and supports the efforts of the Federal Reserve to expand the Main Street lending program to allow access to this
important financing to nonprofits. Further, given the extraordinary circumstances surrounding the COVID-19 pandemic and significant
challenges all hospitals in New York state are facing, HANYS recommends that the Federal Reserve remove any restrictions that would
otherwise limit participation in the program by nonprofit hospitals based on numbers of employees or typical revenue.
The extraordinarily steep and sustained nature of these revenue losses is directly tied to New York's status as the epicenter of the
COVID-19 epidemic. Since March, our hospitals have expended disproportionate financial resources to prepare for the surge of COVID-19
patients, canceled non-emergent procedures, lost significant patient volumes due to stay-at-home orders and expended extreme financial
resources to make extraordinary personal protective equipment and other supply purchases at a premium to keep healthcare workers and
patients safe.
Moreover, fear of contracting the virus has resulted in drops in patient volume even for emergent conditions like heart attacks and strokes.
These enormous declines in patient revenue in combination with higher costs to prepare for surge capacity have created enormous fiscal
stress for our hospitals. As a result, hospitals across the state have been forced to take funding advances and loans, delay accounts payable,
furlough thousands of staff and postpone much-needed capital projects.
Unlike any other sector, hospitals across the country, and particularly in New York, have been on the front lines of the national public health
crisis and have risen to meet the challenge, providing services 24/7 under extreme pressure. Now, as we begin to emerge from the crisis in
Staff Group - Main New York, our nonprofit and public hospitals continue to need financing to be able to provide much-needed services in their communities. The
Street Lending Main Street lending program provides an important avenue to access that needed financing.
Program - Nonprofit Healthcare
Organization PIO (Email 6/21/2020 bgrause@hany Association of Thank you for your proposal and for considering our comments.
Facilities from Web) 12:00:00 AM Grause Bea s.org New York State
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Comments for Main Street Loan Programs for Nonprofits
Thank you for the opportunity to provide comments on the Main Street Loan Program for Nonprofits. As a Federal Department of Health and
Human Services-supported training and technical assistance provider to Federally Qualified Health Centers (FQHCs) nationally, Capital Link
has worked with 3/4ths of all FQHCs nationally over 25 years helping them access capital for their facility and operational needs. As such, we
are uniquely positioned to advise the Federal Reserve on reasonable lending parameters for the Main Street Loan Program as they relate to
FQHCs.
We are writing on behalf of the more than 1,400 Federally Qualified Health Centers across the country. FQHCs are community-based, non
profit organizations whose goal is to provide affordable, accessible health care for all individuals, regardless of their ability to pay. As explained
below, we appreciate the Federal Reserve's intention to expand Main Street Loans to non-profit organizations; however, after closely
reviewing the draft Term Sheet, we determined that almost no FQHCs would qualify for these loans under the current eligibility requirements.
Therefore, we are therefore requesting that:
the loan terms be revised to enable the majority of FQHCs to qualify, and
FQHCs be permitted to work with Community Development Financial Institutions (CDFIs) to access Main Street loans, as CDFIs understand
the unique FQHC model and collectively have provided more than $2.1 billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
Background on FQHCs and the COVID-19 Pandemic
As community-based, non-profit organizations committed to ensuring access to health care, FQHCs have been on the frontlines of the COVID-
19 pandemic since the beginning. With more than 12,000 care delivery sites nationally, FQHCs provide care for nearly 30 million patients.
FQHC patients have been disproportionately impacted by the pandemic, as 91% of them are low-income, 23% are uninsured, and 68% are
racial and ethnic minorities, many of whom suffer from multiple chronic health conditions associated with poverty and the effects of racism.
Throughout the pandemic, FQHCs have provided a range of critical front-line care and a growing proportion of testing, particularly in the low-
income, minority communities they serve. At the same time, FQHCs have experienced a significant decline in revenue, due to the need to
curtail many primary and preventive care visits. This combination has placed major financial strain on these non-profit, community-based
providers, forcing them to close sites and lay off staff at the time when their services are most needed.
While FQHCs have received some Federal funding to support COVID relief, for many FQHCs this funding is not enough to reestablish their
pre-COVID level of operations, let alone prepare for the increased demand that will result as millions of newly-unemployed and uninsured
individuals turn to them for care. To date, the Provider Relief Fund has offered most FQHCs only 2% of their net patient revenues; also,
FQHCs with over 500 staff - which in total care for about 9 million patients - are ineligible for Paycheck Protection Loans because of their size.
Recommendation to expand eligibility criteria to allow majority of FQHCs to qualify:
For these reasons, Capital Link was relieved to hear that the Small Business Administration will soon make Main Street Loans available to non
profit organizations with 50 to 15,000 employees. However, after reviewing the Terms Sheet, we determined that almost no FQHCs would
qualify under the proposed eligibility criteria.
This conclusion is based on our analysis of health center audited financial statements contained in our proprietary database containing
decades of audits for ~85% of FQHCs in each year. A review of the audited data indicates that under the proposed lending parameters:
Prior to the pandemic, only 13% of health centers would have met the combined criteria. This includes less than one in five of the FQHCs with
over 500 staff, who are currently ineligible for the Paycheck Protection Program.
Because of the significant cash declines experienced by FQHCs as a result of COVID-19, at present, far fewer than 13% would be able to
meet the DCOH and Cash/Debt ratio at loan origination.
The most problematic financial parameters for FQHCs are:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 5%
Staff Group - Main
Street Lending Days cash on hand at loan origination equal to or greater than 90 days
Program - Nonprofit Ratio of unrestricted cash and investments to outstanding debt (including Main Street debt and CMS Accelerated and Advance Payments) at
Organization PIO (Email 6/21/2020 acoleman@cap origination is 65% or greater
Facilities from Web) 12:00:00 AM Coleman Allison link.org Capital Link
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
In order to provide a meaningful program for which approximately 60% of FQHCs would qualify, we request that the Federal Reserve adjust
the following lending parameters for FQHCs loans as follows:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 3%
Days cash on hand at loan origination equal to or greater than 30 days
Eliminate the unrestricted cash to debt ratio requirement
Lower the minimum employee requirement to 20.
In addition, we ask that the Federal Reserve clarify the eligibility requirement that reads: "has not received specific support pursuant to
the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)." As you know, Section 4003 of Title IV
authorizes the Federal government to make loans to States and municipalities for COVID-19 relief. It is possible that a state or municipality
could receive a loan under Section 4003, and use part of it to support FQHCs or other safety net providers. To make clear that FQHCs or other
providers who receive this type of support from their state are still eligible for Main Street Loans, we recommend that the term "specific
support" be revised to read "direct support."
Request for FQHCs to work directly with CDFIs to access Main Street Loans
Finally, it is important to note that Community Development Financial Institutions (CDFIs) have historically played a major role in providing
financing to FQHCs for decades. As such, they understand the FQHC model and are best positioned to underwrite loans to health centers. We
are part of a 25-member coalition of CDFIs who have joined together to promote access to capital for FQHCs. Together, members of the
Lenders Coalition for Community Health Centers have collectively provided more than $2.1 billion in loans to FQHCs, with a default rate of less
than 1/1 Oth of 1%.
Unfortunately, very few CDFIs would qualify as eligible lenders under the program as it is currently construed. To enable FQHCs to work
directly with lenders who best understand their model and needs, we recommend that the Federal Reserve structure the nonprofit portion of
the Main Street Loan Program to:
Allow CDFIs to participate as lenders in the program; and
Allow CDFIs to borrow from the Federal Reserve under the same terms as banks, which would enable CDFIs to offer interest rates to FQHCs
at LIBOR +3%
We are providing these comments on short notice to accommodate the Federal Reserve's request. We would be happy to provide more
detailed comments and/or provide additional information to assist the Federal Reserve in developing a program that will be responsive to the
current needs of Federally Qualified Health Centers.
The credit opportunity to nonprofits as part of the Main Street Lending program is the only vital lifeline left for small and medium sized
nonprofits. The cap on the SBA EIDL loan of $150k after weeks and weeks of waiting for many non profits is sealing our fate. Furloughs,
layoffs, cost cuts and cancellation of our programs has wreaked operational havoc on nonprofits with a narrowing window for assistance,
particularly in the Arts/Culture/Education field.
Staff Group - Main The Main Street lending opportunity loan structure incorporates most non profits - low interest rates, a longer repayment option (ie-10 year
Street Lending option would be helpful) would allow non profits to keep fulfilling our mission and survive. A portion of forgiveness would also be helpful
Program - Nonprofit regarding fixed cost. This loan option will allow non profits to bridge the gap between this fiscal year and next fiscal year. Please fund this
Organization PIO (Email 6/21/2020 dmonte@inspir Inspire Arts and lending program.
Facilities from Web) 12:00:00 AM Monte Donna earts.org Music, Inc.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
I believe smaller nonprofits should qualify for this loan. In fact, they may need the most help. They shouldn't be discriminated against
based on employee size. The impact of a non-profit and their ability to pay back a loan is not aligned with the the employee size of the
organization.
Staff Group - Main If the goal of the program is to help a successful small to mid-size business/non-profit that has been impacted by the pandemic, it should help
Street Lending those on the smaller side too. There are many small non-profits that have a tremendous impact on many people and will be put out of business
Program - Nonprofit because of the virus. Please eliminate the employee minimum and make the program an option for these successful organizations knowong
Organization PIO (Email 6/21/2020 farina@scholar Scholar the loan will allow these smaller organizations a path to survival.
Facilities from Web) 12:00:00 AM Farina Nicholas ventures.com Ventures
We are writing on behalf of the Colorado Community Health Network (CCHN) and Colorado's Federally Qualified Health Centers
(FQHCs). FQHCs are community-based, non-profit organizations whose goal is to provide affordable, accessible health care for all individuals,
regardless of their ability to pay. As explained below, we appreciate the Federal Reserve's intention to expand Main Street Loans to non
profit organizations; however, after analyzing the draft Term Sheet, we have determined that almost no FQHCs would qualify for these loans
under the current eligibility requirements. Therefore, we are requesting that:
the loan terms be revised to enable the majority of FQHCs to qualify, and
FQHCs be permitted to work with Community Development Financial Institutions (CDFIs) to access Main Street loans, as CDFIs understand
the unique FQHC model and collectively have provided more than $2.1 billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
Background on Colorado FQHCs and the COVID-19 Pandemic
Colorado Community Health Network is the membership association for Colorado's 20 FQHCs. As community-based, non-profit
organizations committed to ensuring access to health care, FQHCs have been on the frontlines of the COVID-19 pandemic since the
beginning. With more than 200 care delivery sites statewide, Colorado FQHCs provide care for more than 830,000 Coloradans. Our patients
have been disproportionately impacted by the pandemic, as 92% of them are below 200% of the Federal Poverty Level, 49% are on Medicaid,
and 24% are uninsured.
Prior to the COVID-19 crisis, CHCs were already experiencing financial hardship as a result of significant declines in the number of patients
covered by Medicaid and increases in uninsured patients. This pre-COVID decline depleted cash reserves for some CHCs and forced FQHCs
to make tough decisions related to services and staffing. Now, with COVID-19, CHCs are experiencing further financial hardship, challenging
their long-term ability to maintain staffing, patient capacity, and facilities.
FQHCs have gratefully received some federal stimulus funds and are incredibly thankful for the strong support of FQHCs from the Colorado
congressional delegation. The federal stimulus funds are keeping FQHCs from going out of business in the short-term, but are not enough to
ensure CHCs can continue through and after this public health crisis to be the foundation for primary care in Colorado.
Recommendation to expand eligibility criteria to allow majority of FQHCs to qualify:
Because of these financial needs, CCHN was relieved to learn that the Federal Reserve would soon start offering Main Street Loans to non
profits. However, after reviewing the proposed Terms Sheet and consulting with experts , we have concluded that almost no FQHCs would
qualify under the proposed eligibility criteria.
This conclusion is based on an analysis conducted by Capital Link, a non-profit organization that receives funding from the Federal Department
of Health and Human Services to assist FQHCs with accessing capital. Capital Link determined that under the proposed lending parameters:
Prior to the pandemic, only 13% of FQHCs nationwide would have met the combined criteria. This includes less than one in five of the FQHCs
with over 500 staff, who are currently ineligible for the Paycheck Protection Program.
Because of the significant cash declines experienced by FQHCs as a result of COVID-19, at present, far fewer than 13% would be able to
Staff Group - Main meet the DCOH and Cash/Debt ratio at loan origination.
Street Lending
Program - Nonprofit The most problematic financial parameters for FQHCs are:
Organization PIO (Email 6/22/2020 Asteiner@cchn EBIDA to unrestricted 2019 operating revenue greater than or equal to 5%
Facilities from Web) 12:00:00 AM Steiner Alice .org COHN Days cash on hand at loan origination equal to or greater than 90 days
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Ratio of unrestricted cash and investments to outstanding debt (including Main Street debt and CMS Accelerated and Advance Payments) at
origination is 65% or greater
In order to provide a meaningful program for which approximately 60% of FQHCs would qualify, we request that the Federal Reserve adjust
the following lending parameters for FQHCs loans as follows:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 3%
Days cash on hand at loan origination equal to or greater than 30 days
Eliminate the unrestricted cash to debt ratio requirement
Lower the minimum employee requirement to 20.
In addition, we ask that the Federal Reserve clarify the eligibility requirement that reads: "has not received specific support pursuant to
the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)." As you know, Section 4003 of Title IV
authorizes the Federal government to make loans to States and municipalities for COVID-19 relief. It is possible that a state or municipality
could receive a loan under Section 4003, and use part of it to support FQHCs or other safety net providers. To make clear that FQHCs or other
providers who receive this type of support from their state are still eligible for Main Street Loans, we recommend that the term "specific
support" be revised to read "direct support."
Request for FQHCs to work directly with CDFIs to access Main Street Loans
Finally, it is important to note that Community Development Financial Institutions (CDFIs) have historically played a major role in providing
financing to FQHCs for decades. As such, they understand the FQHC model and are best positioned to underwrite loans to health centers. A
coalition of 25 CDFIs who are members of the Lenders Coalition for Community Health Centers have collectively provided more than $2.1
billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
Unfortunately, very few CDFIs would qualify as eligible lenders under the program as it is currently construed. To enable FQHCs to work
directly with lenders who best understand their model and needs, we recommend that the Federal Reserve structure the nonprofit portion of
the Main Street Loan Program to:
Allow CDFIs to participate as lenders in the program; and
Allow CDFIs to borrow from the Federal Reserve under the same terms as banks, which would enable CDFIs to offer interest rates to FQHCs
at LIBOR +3%
We are providing these comments on short notice to accommodate the Federal Reserve's request. We would be happy to provide more
detailed comments and/or provide additional information to assist the Federal Reserve in developing a program that will be responsive to the
current needs of Federally Qualified Health Centers.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
PATH (People Assisting The Homeless) appreciates the opportunity to submit comment to the Federal Reserve about the Nonprofit
Organization Loan Facilities. PATH is a statewide homeless services and housing development agency that works in 140 cities across the
state and serves 20% of the state's homeless population. While we appreciate the effort made to extend the Main Street Lending program
to nonprofits, there are changes needed to ensure that we, and similar nonprofits, will apply.
This proposal is aimed more at transactional nonprofits such as hospitals and institutions of higher education than at nonprofits like ours that
have a larger reliance on donations from the public to support their missions. Indeed, many nonprofits pride themselves on offering their
services at no charge. Recognizing that their business models are different, even if both types of charities are inherently organized around a
public mission, many of the financial requirements included in this proposal simply are not applicable to organizations that rely on donations.
With that in mind, PATH respectfully requests the Federal Reserve to address the concerns and proposed changes outlined below.
1. Congress Must Act to Ensure Mid-Sized Nonprofits are Eligible for Loan Forgiveness
Congress must ensure that mid-sized nonprofits have access to loan forgiveness. While it is a welcome development to see the Federal
Reserve making its Main Street lending program available to some nonprofits, this assistance still falls short of what is most needed by
nonprofit organizations - a provision that makes these loans forgivable.
In this critical time, nonprofits have stepped up to meet the unprecedented level of need in our country due to the COVID-19 pandemic. Even
though they face many of the same economic challenges as other industries, nonprofits are not shutting down. Rather, they are straining to
meet increasing demands in our communities on the frontlines, caring for the sick, housing the homeless, feeding families, and keeping our
communities connected. Furthermore, they will play an integral role as our nation recovers - providing child care, job training, and other core
supports.
Charitable nonprofits of all sizes and focus areas are struggling to maintain mission-critical operations despite enormous economic challenges.
Data released by Independent Sector shows that nonprofits with between 500 to 5,000 employees, key to scaling relief efforts across the
nation, have been severely impacted by this health and economic crisis. When asked "What types of additional assistance would be most
helpful to your organization?" organizations overwhelmingly (92% of responses) suggested government support in the form of forgivable
loans. Smaller nonprofits throughout the country have been hit equally hard.
Nonprofit organizations need funding so they can continue to meet the needs of their communities. Many charitable organizations do not have
steady streams of commercial income and have little capacity for loan and interest repayment. Furthermore, nonprofits are the third largest
employment sector and many hope to hire more workers as their organizations recover. America cannot afford to leave out such a vital part of
the economy.
Recommendation: Congress must recognize the vital services nonprofits provide to communities and the economy by including loan
forgiveness, in the next round of COVID-19 relief legislation.
2. The Fed Needs to Make Loan Terms More Favorable to Charitable Organizations
The draft Nonprofit Loan Facility imposes certain liquidity, asset, and reserve requirements that are not required in Main Street New Loan
Facilities available to for-profit businesses.
Nonprofit organizations typically provide services with low-profit margins. Indeed, social service organizations report an average aggregate
margin of 1.5%. According to a recent report by Seachange Capital Partners, the median social services nonprofit has a margin of 1.0%,
receives 3.6% of its revenue from philanthropy (including investment income), has total financial assets (including endowments and other
assets that are subject to legal restrictions) equal to 1.9 months of expenses, and operating reserves of less than one month of expenses. Less
than 20% of large nonprofits have 6 months or more of operating reserves, a widely accepted standard for "financial strength" for
nonprofits. Social services organizations are the most fragile, with fewer than 10% reaching this standard.
The statistics above should not be viewed as an indictment of the efficiencies or management policies of nonprofits. It is important to note that
Staff Group - Main the vast majority of social service nonprofit funding comes from government grants contracts, recognizing the key role such organizations play
Street Lending in serving the most vulnerable. Numerous studies confirm that government funding seldom covers the full cost of providing contracted work,
Program - Nonprofit which inhibits nonprofits from accumulating reserves through surpluses. In many instances, government grant/contract work creates cash-flow
Organization PIO (Email 6/22/2020 zacharys@epat challenges since it is paid after the work has been completed and can be subject to significant delays in payment.
Facilities from Web) 12:00:00 AM Schlagel Zachary h.org PATH
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Recommendation: Recognizing the unique nature of nonprofit operations and their importance in continuing to provide vital services as
partners on the front lines of the COVID-19 crisis, we urge the Federal Reserve to eliminate borrower requirements 7 and 8. If this is not
possible, we alternatively ask that the requirements be lessened significantly to reflect the economic realities of nonprofit operations, for
example by requiring only 30 days cash on hand, and bringing the loan origination ratio to 40-50% (down from 65% as proposed).
We are also concerned that certain eligible loan features are too onerous for nonprofit organizations and are less favorable than those offered
in other government programs. Specifically, the interest rate of LIBOR plus 300 basis points is significantly higher than that offered for
Paycheck Protection Program ("PPP") Loans (1.0%) and that for Economic Injury Disaster Loans (2.75%).
In addition, the imposition of loan origination and service fees adds to the cost under the Nonprofit Facility. Finally, the notion that nonprofits
would be faced with a 70% balloon payment at the end of the fifth year of the loan would be off-putting for many nonprofits. Nonprofits with
existing loans with balloon payments are usually provided an opportunity to renegotiate such loans at prevailing market rates.
Recommendation: We urge that the loan terms including interest rate and balloon payments be revisited and recommend the lowest
permissible rate such as the 0.5% rate initially proposed for PPP loans. In addition, we urge some flexibility in the balloon payment requirement
to afford the opportunity for renegotiation. If the 5-year amortization were extended to 7 years, this could lessen the balloon payment. We
request that the borrower have access to engage with derivatives (change to a fixed rate) without the minimum swap requirements.
3. The Ratio of Adjusted 2019 Earnings before "EBIDA" Should Be Revised
In the "Draft for Public Consultation," for both the Nonprofit Organization New Loan Facility and the Nonprofit Organization
Expanded Loan Facility, one of the eligibility criteria for borrowers is that they must have "a ratio of adjusted 2019 earnings before
interest, depreciation, and amortization ("EBIDA") to unrestricted 2019 operating revenue, greater than or equal to 5%." (#6)
In the context of nonprofit operations, this threshold is too high and would make us, as well as many, if not most, nonprofits ineligible based on
these criteria alone, which seems written more in the context of for-profit businesses as opposed to nonprofit organizations.
It may certainly be prudent and necessary to have a positive ratio of adjusted earnings; however, nonprofits generally run on a small margin,
both out of necessity and also so as to not leave excess surpluses that could be used for fulfilling their missions. Moreover, at times a nonprofit
may have a planned and manageable deficit as part of a strategic plan-a negative ratio at one isolated point is not always an indication of
instability.
Furthermore, the footnotes for criteria #6 clarify that "The Eligible Lender should calculate operating revenue as unrestricted operating
revenue, excluding funds committed to be spent on capital.Xquot; Many nonprofits have "restricted revenue" through grants and
contracts built into their operating budgets. Excluding this revenue would compound the problem of meeting the 5% ratio. Although it would be
sensible to exclude contributions raised for a "capital campaign," excluding other capital funds included in an annual budget for
maintenance and planned upgrades would further decrease the required ratio.
Recommendation: The 5% requirement should be reduced to zero, if not eliminated. In addition, a statement of explanation of a deficit should
be allowed so that a negative ratio does not mean automatic ineligibility for a nonprofit borrower. Finally, further clarification on the calculation
methodology -in the context of nonprofit operating budgets- is needed in regard to both restricted funding from grants in annual operating
budgets, as well as capital funds for improvements that are part of an annual operating budget. This clarification would allow noted revenues to
remain in calculation to ease the restriction and not further restrict eligibility.
Additionally, looking at average daily expenses over the previous year, equal to or greater than 90 days seems overly restrictive with many
nonprofits having less than 60 days. The threshold you suggest is more typical to a for-profit business and would need to be lessened or
eliminated entirely in order to accommodate nonprofits like ours.
Lastly, the direction that, at the time of loan origination, a nonprofit 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 CMS Accelerated and Advance
Payments, that is greater than 65%; seems overly restrictive for nonprofits facing financial difficulty.
4. Xquot;Reasonable EffortsXquot; Regarding Employee Retention Require Further Clarification
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
The description of Squot;Retaining Employees" in the draft term sheet requires refinement if the Federal Reserve expects nonprofits to
take advantage of this facility. We endorse the analysis of the National Council of Nonprofits on the issue of employee retention, and
recommend the following:
Recommendation: "Reasonable efforts" should be interpreted in the totality of the circumstances, taking into consideration not only
the general economic environment in the community or communities in with the borrower operates, but also factors such as workforce,
fundraising ability, revenue-generating activities, and overall demand for the services and programs the organization provides. One option
would be to add the qualifier "mission-based" before "reasonable efforts."
Recommendation: The terms "maintain its payroll" and "retain its employees" are vague and need further refinement, as
well as some reasonable safeguards given the unpredictability of our current environment. We ask the Federal Reserve to make clear that
nonprofits participating in the Main Street loan program generally should endeavor to pay staff at the same or increased income levels and
should act in good faith to keep staffing levels (measured on the basis of full-time equivalents) at the same or increased levels, both for the
duration of the loan. It is also important that the loan documents expressly state that the employee retention provision begins on the date that
loan funding is received by the borrower rather than at an earlier date.
Recommendation: We ask that the Federal Reserve adopt safe harbors of other loan programs and state clearly that nonprofit borrowers will
not be penalized under the employee retention provision for the decision of employees to decline offers of rehire, or for those who are fired for
cause, voluntarily resign, or voluntarily request a reduced schedule during the time that the loan is outstanding.
5. Additional Recommendations and Requests for Clarification
PATH respectfully requests the Federal Reserve clarify the following issues in its final expansion notice.
Endowment: What resources should be included in endowment calculations? Does it include restricted endowments? Does it extend to include
cash on hand?
Collateral: Flexibility on collateral is requested. The loan should be able to be approved with no more than 50% Loan to Value (LTV) if
collateral is needed.
Other Debts: The proposal requires that borrowers, "refrain from repaying the principal balance of, or paying any interest on, any debt
until the Eligible Loan is repaid in full, unless the debt or interest payment is mandatory and due." We request that this exclude lines of
credit and other debt that are assumed to provide financial liquidity related to the impact of COVID-19.
PATH commends you for working collaboratively with us and our fellow nonprofits to make the Main Street Lending Program available to some
nonprofits. We look forward to working proactively with you to make the necessary changes to ensure this program is useful during this time of
uncertainty for us, our nonprofit counterparts and, most importantly, our clients.
Sincerely,
Joel John Roberts
CEO
PATH and PATH Ventures
www.epath.org
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
June 22, 2020
The Michigan Primary Care Association (MPCA) appreciates the opportunity to provide comments to the Federal Reserve about their proposed
parameters for making low-interest Main Street Loans available to nonprofit organizations.
An analysis of the draft "Term Sheet" conducted by Capital Link, a non-profit organization that receives funding from the Federal
Department of Health and Human Services, to assist CHCs with accessing capital determined that almost no community health center (CHC)
would qualify for these loans under the current eligibility requirements. Therefore, we are requesting that:
The loan terms be revised to enable the majority of CHCs to qualify.
CHCs be permitted to work with Community Development Financial Institutions (CDFIs) to access Main Street loans, as CDFIs understand the
unique CHC model and collectively have provided more than $2.1 billion in loans to CHCs, with a default rate of less than one-tenth of 1
percent.
MPCA is the voice of 45 community health centers (CHCs) that provide quality, affordable, comprehensive primary and preventive care to
more than 709,000 Michigan residents at more than 330 sites located in rural and urban communities across the state. More than 52 percent of
those patients rely on Medicaid for care, and they often face multiple social and environmental facts that challenge their ability to access the
care they need - regardless of coverage. Without community health centers, many would be forced to look outside their communities for health
care or would have no access to care at all.
As community-based, nonprofit organizations committed to ensuring access to health care, CHCs have been on the frontlines of the COVID-19
pandemic since the beginning. With more than 330 care delivery sites in the state of Michigan, we provide care for nearly 709,000 patients.
Our patients have been disproportionately impacted by the pandemic, as 70 percent are low-income, 15 percent are uninsured, and 41 percent
are racial and ethnic minorities, many of whom suffer from multiple chronic health conditions associated with poverty and the effects of racism.
Throughout the pandemic, health centers have provided a range of critical front-line care and a growing proportion of testing, particularly in the
low-income, minority communities they serve. At the same time, we have experienced a significant decline in revenue due to the need to curtail
many primary and preventive care visits. As a result, many health centers have had to make difficult choices, including reductions in services,
layoffs, and site closures.
While we have received some federal funding to support COVID relief, it's not enough to reestablish our pre-COVID-19 level of
operations, let alone prepare for the increased demand that will result as newly-unemployed and uninsured individuals turn to us for care. To
date, the Provider Relief Fund has offered most CHCs only 2 percent of their net patient revenues; also, CHCs with more than 500 staff are
ineligible for Paycheck Protection Loans because of their size.
Because of these financial needs, MPCA was relieved to learn that the Federal Reserve would soon start offering Main Street Loans to
nonprofits. The Independent analysis of the draft "Term Sheet" concluded that almost no CHCs would qualify under the proposed
eligibility criteria. Prior to the pandemic, only 13 percent of health centers would have met the combined criteria. Now, four months from the
start the pandemic, far fewer than 13 percent would be able to meet the days cash on hand and cash/debt ratio at loan origination.
The most problematic financial parameters for CHCs include:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 5 percent.
Days cash on hand at loan origination equal to or greater than 90 days.
Ratio of unrestricted cash and investments to outstanding debt (including Main Street debt and CMS Accelerated and Advance Payments) at
origination is 65 percent or greater.
In order to provide a meaningful program for which approximately 60 percent of CHCs would qualify, we request that the Federal Reserve
adjust the following lending parameters for CHCs loans as follows:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 3 percent.
Days cash on hand at loan origination equal to or greater than 30 days.
Eliminate the unrestricted cash to debt ratio requirement.
Staff Group - Main
Street Lending
Program - Nonprofit Michigan Lower the minimum employee requirement to 20.
Organization PIO (Email 6/22/2020 dnewman@mp Primary Care
Facilities from Web) 12:00:00 AM Newman David ca.net Association In addition, we ask that the Federal Reserve clarify the eligibility requirement that reads: "has not received specific support pursuant to
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)." As you know, Section 4003 of Title IV
authorizes the federal government to make loans to States and municipalities for COVID-19 relief. It is possible that a state or municipality
could receive a loan under Section 4003 and use part of it to support CHCs or other safety-net providers. To make clear that CHCs or other
providers who receive this type of support from their state are still eligible for Main Street Loans, we recommend that the term "specific
support" be revised to read "direct support."
Finally, it is important to note that CDFIs have historically played a major role in providing financing to CHCs for decades. As such, they
understand the CHC model and are best positioned to underwrite loans to health centers. A coalition of 25 CDFIs who are members of the
Lenders Coalition for Community Health Centers have collectively provided more than $2.1 billion in loans to CHCs, with a default rate of less
than one-tenth of 1 percent.
As the program is currently construed, very few CDFIs would qualify as eligible lenders. To enable CHCs to work directly with lenders who best
understand their model and needs, we recommend that the Federal Reserve structure the nonprofit portion of the Main Street Loan Program
to:
allow CDFIs to participate as lenders in the program; and
allow CDFIs to borrow from the Federal Reserve under the same terms as banks, which would enable CDFIs to offer interest rates to CHCs at
LIBOR +3 percent.
The Michigan Primary Care Association thanks you for the opportunity to submit these comments. If you have any questions, please contact
David L. Newman, associate director of policy and government affairs, dnewman@mpca.net.
Sincerely,
Dennis Litos
Interim CEO
MPCA
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
On behalf of the Alzheimer's Association, the more than 5 million Americans living with Alzheimer's and other dementia, their 16
million unpaid caregivers, and our volunteers and supporters across the country, we appreciate the Federal Reserve's acknowledgement
of the critical role charitable nonprofits play in our country and our economy. While this proposal is a promising first step, several of the
eligibility requirements and loan terms make it infeasible to the Alzheimer's Association and many other large nonprofits.
We have continued our mission during the pandemic, providing care consultations, caregiving tips, and 24/7 access to free, confidential
support. But the financial impact of the crisis threatens our ability to continue to serve all those touched by Alzheimer's and dementia-a
population that will only grow in the coming years.
First, the proposed cap on revenue from charitable contributions puts these loans out of reach. The generous contributions from individuals
and families affected by Alzheimer's disease have far exceeded 30 percent of our total revenue for many years. Given that this is also
true for other health and human service organizations of similar size and given that this runs counter to Internal Revenue Service rules that
require charitable nonprofits receive at least a third of their revenues via contributions from the general public, contributions or grants from
other public charities, or from governmental agencies in order to retain their 501(c)(3) status, we respectfully request that the Federal Reserve
explain the underlying rationale for this cap.
The proposed interest rate of LIBOR + 3 percent also makes this proposal unworkable. Nonprofits have already suffered financially and
economic recovery will take years. Every dollar we spend on interest repayment is a dollar diverted from services to all persons affected by
dementia. While we strongly prefer 0 percent interest since nonprofits are structurally different than for-profits and on the front lines of the
COVID-19 crisis, we at least would recommend a 0.50 percent interest rate (50 basis points) for 501(c)(3) charitable nonprofits at a 5-year
amortization.
We appreciate the proposed term that the principal of any loan will not come due for two years, but we respectfully request an extension of the
interest deferment period. Nonprofits will need more time to begin any repayment, especially those reliant on charitable donations, which are
also likely to be negatively affected for months or years to come.
Finally, we acknowledge that the Federal Reserve and the Department of the Treasury are unable to provide a loan forgiveness option without
a statutory change. However, we take this opportunity to call on Congress to make the necessary amendments to allow the Federal Reserve to
provide loans and loan guarantees with an option for forgiveness. As we note above, this is critical, as each dollar spent on loan and interest
Staff Group - Main repayment is a dollar diverted from our constituents.
Street Lending
Program - Nonprofit Thank you for the opportunity to comment. The Alzheimer's Association would be pleased to assist the Federal Reserve in any way to
Organization PIO (Email 6/22/2020 lthornhill@alz- Alzheimer's make credit accessible to charitable organizations serving some of the country's most vulnerable populations.
Facilities from Web) 12:00:00 AM Thornhill Laura aim.org Association
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
On behalf of the Audubon Nature Institute, I am writing to comment on the Federal Reserve Board's proposal to expand the Main Street
Lending Program (MSLP) to provide access to credit for nonprofit organizations. Thank you for expanding the MSLP to include large non
profits impacted by the financial decline caused by COVID-19.
At Audubon, we care for over 15,000 animals, employ over 900 full and part-time dedicated staff
members, and are Louisiana's top paid-attendance destination. Unfortunately, because
of our size, Audubon's employees do not qualify for support under the Paycheck Protection
Program.
While Audubon's doors remain shuttered to visitors until this month, our obligation to the animals and parks in its care is unchanged. We
have taken measures to reduce staff and pay cuts, but the costs associated with caring for animals is ongoing.
While it is a welcome development to see the Federal Reserve making its Main Street lending program available to some nonprofits, this
assistance still falls short of what is most needed by nonprofit organizations - a provision that makes these loans forgivable. Congress must act
to ensure that mid-sized nonprofits have access to loan forgiveness.
Coronavirus PIO (Email 6/22/2020 rdietz@audubo Audubon On behalf of Audubon Nature Institute, the animals in our care, our community and our state, we thank you for your consideration.
(COVID-19) from Web) 12:00:00 AM Dietz Rebecca ninstitute.org Nature Institute
Event Title 1
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
June 22, 2020
Submitted Electronically at FederalReserve.gov
Board of Governors
Federal Reserve
Re: Main Street Lending Program- Nonprofit Organization Facilities
To whom it may concern:
Thank for you this opportunity to provide comments on the Nonprofit Organization Facilities under the Main Street Lending program. The
Community Builders (TCB) appreciates the Federal Reserve's recognition of the vital role of nonprofit organizations as employers and
community institutions and the important role that they will play in an equitable economic recovery. TCB is one of America's longest-
established multi-state nonprofits involved in affordable housing and community development. Approximately 25,000 people live in 100+ TCB-
owned affordable and mixed-income apartment communities that are located in 30 metro areas throughout the Northeast, Midwest and
MidAtlantic US. TCB preserves and develop affordable multifamily homes that expand opportunity and create dignity for low-income persons
with disabilities, the elderly, families, and the homeless. By efficiently and creatively leveraging private, public and philanthropic resources,
TCB has developed or preserved more than 33,000 affordable rental homes across the county. The affordable homes that TCB creates and
preserves are a source of stability and resilience for residents and communities. TCB also partners with many local community nonprofits to
address the holistic needs of their residents. The following comments are ones we prepared after consultation with many of the other multi
state housing nonprofits in the US.
We appreciate the flexibility that the Federal Reserve has tried to create in the nonprofit extension of this program. However, we are concerned
that while some of the eligibility requirements are well-suited for manufacturing and profit-motivated businesses that sells goods, they
don't contemplate the broad and complex range of business models used by nonprofit organizations, including developers and operators
of affordable housing. Many nonprofits, including SAHF members, do not have endowments that generate significant income. Many have
revenue generating activities other than fundraising as well. Affordable housing developers typically do not have endowments and rely primarily
on development fees, distributions from operating properties and management fees. The comments below address how the eligibility criteria
apply to nonprofit affordable housing developers, but we recognize that the eligibility criteria will present different challenges for other types of
nonprofits and we encourage the Federal Reserve to apply flexible/adaptive criteria that recognizes the unique models of nonprofits.
Eligible Loans
Terms
While many SAHF member nonprofits anticipate that they may need the resources provided by a Main Street loan, the terms on which the
loans are proposed are challenging. First, the LIBOR plus 300 basis point rate is higher than what most organizations are charged for lines of
credit from their banks, we urge the Federal Reserve to pursue a lower interest rate to make this program more feasible for nonprofits. Further,
the five-year term of the loan could limit the utility of this this resource. Consistent with the analysis of many financial experts, SAHF members
anticipate that the current recession will impact their organizations for years to come, but the extent of the impact is not yet known. This is
particularly true because of the long lead time of developing real estate. Bringing a new affordable housing development to market can take
three to five years. For this reason, a five-year repayment term for impacts not yet fully realized makes the loan program less attractive.
Line of Credit, Revolving and Prepayment
To minimize borrower interest expense and risk to the government, we encourage the Federal Reserve to consider making these funds
available as a line of credit with a term of five years from the date first drawn upon. If a letter of credit is infeasible, the Federal Reserve could
allow these loans to prepaid and redrawn within the five-year eligibility provided that the maturity shall not exceed the original five-year window.
Further, we are concerned about the cost and impact of keeping the loan outstanding for longer than it may be needed, so we ask that you
confirm that there will be no restrictions on or penalty/yield maintenance for prepayment.
Subordination
Lenders should be allowed flexibility to allow the Main Street loan to be subordinate to existing debt if all debt is current and the organization
The meets other leverage requirements. Nonprofit housing organizations often operate with significant leverage at both the property and corporate
Other: Comments PIO (Email 6/22/2020 bmitchell@tcbi Community level. These borrowings are used to bridge the long timelines from inception to completion of a housing development project. Much of this debt
on draft regs from Web) 12:00:00 AM Mitchell Bart nc.org Builders is from other public sources and subordinate to senior commercial debt. It will be very difficult if not impossible to have all lenders agree to
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
subordinate to the new Main Street loan. This will substantially impact the ability to use this tool by housing nonprofits, so it is critical that an
alternate criterion be identified. Further, the interest rate that is proposed by the Main Street program fits with the idea that this will not be the
most senior debt they carry but rather that it will be subordinate debt that fits within leverage requirements.
Security
For housing nonprofits this product would be very useful if the nonprofit was allowed to pledge an interest in one or more specific future
developer fee receipts on projects that have closed and are in construction, with the option of substituting additional such collateral through the
five-year term. This could also have the advantage of providing the lender and the Federal Reserve with specific collateral to lend against
obviating the need for the subordination requirement, if the LTV ratio of such loans was 65-85% of the developer fees pledged, the nonprofit
would have current access to future developer fees while still providing the lender and the Federal Reserve with a margin of safety.
Eligible Borrowers
Parent Organization as Borrower
The Eligible Borrower requirement should be applied only to the parent nonprofit entity. Most housing nonprofits operate through numerous
single purpose entities owning real estate. In general, the requirements surrounding the low income housing tax credit (LIHTC), requires a
structure where the single purpose entity is controlled by the nonprofit, but the housing nonprofit has only a less than 1% interest, nevertheless
the entities are required to be consolidated according to GAAP. Since the single purpose entities are designed to generate operating losses for
investors due to depreciation of real estate assets and accrued but unpaid interest on soft debt, housing nonprofits generally generate losses
on a consolidated basis. These losses will impact the eligibility of well-run nonprofits for Main Street loans if GAAP consolidated affiliates are
included. For these reasons the loan qualifications should be applied on a parent-only basis to make this a useful tool for housing nonprofits.
However, it is equally important that borrowers be allowed to use proceeds to support the operation of affordable housing properties owned by
single asset entities since their stable operation is key to to well-being of people with limited economic means.
Flexible Approach on Financial Requirements (Criteria 6-8)
The relatively unique nature of large nonprofits, particularly nonprofit affordable housing developers, makes the earnings, depreciation,
amortization, liquidity and debt ratio requirements of items 6-8 inaccurate measure of financial health. We have outlined key concerns in the
bullets below. We encourage the Federal Reserve to adopt a flexible approach that may allow lenders discretion to underwrite Main Street
loans that meet some minimum number, but not all, eligibility requirements.
o EBIDA (Criteria 6): Most housing nonprofits operate through numerous single purpose entities owning real estate. In general, these single
purpose entities are controlled, but the housing nonprofit has only a less than 1% interest, nevertheless the entities are required to be
consolidated according to GAAP. Since the single purpose entities are designed to generate operating losses for investors due to depreciation
of real estate assets and accrued but unpaid interest on soft debt, housing nonprofits generally generate losses on a consolidated basis. For
these reasons the loan qualifications should be applied on a parent-only basis to make this a useful tool for housing nonprofits.
o Liquid Assets (Criteria 7): Nonprofits operating without substantial endowments may not hold cash equal to 90 days of operating expenses.
This would be much more helpful if this threshold were 30 days. This would be helpful both to housing nonprofits and to direct service
nonprofits with whom we partner that are dependent on government and private sector partners paying invoices on time and therefore subject
to frequent fluctuations in cash, particularly during this crisis.
We appreciate your efforts to adapt this program to the needs of nonprofits that strive to create more equitable communities. Please contact
our CFO Morgan Wilson (mwilson@tcbinc.org ) and/or me (bmitchell@tcbinc.org ) with any questions.
Thank you,
Bart Mitchell, CEO
The Community Builders Inc.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Proxy for Endowments in EBIDA Calculation
Nonprofit organization structures often house endowment functions in separate corporate entities. The term sheets for both NOELF and
NONLF provide that in order to be an Eligible Borrower, there must be a ratio of adjusted 2019 EBIDA to unrestricted 2019 operating revenue
of greater than or equal to 5%. See: Eligible Borrower point 6 for both NOELF and NONLF. In making this calculation footnote 4 in the term
sheets instructs that operating revenue can include a proxy for endowment income in place of unrestricted investment gains or losses. We
respectfully request that the term sheets be revised to allow endowment income from a borrower's separate endowment entity to be
utilized in the calculation. Otherwise, the unintended consequence is to disqualify a borrower, which would otherwise be eligible but for the
corporate separation.
Liquid Assets to Daily Expense Day Ratio
The widest variety of nonprofits (from aggregators and resellers of used clothing to operators of youth services and athletic facilities) were
forced by government regulators to close primary revenue-generating operations. Maintaining the physical integrity of properties, preserving
facility ownership and retaining key employees required significant expenditure of reserves. The reserve burn deforms the suggested
calculation as an indicator of business health. See: Eligible Borrower point 7 for both NOELF and NONLF. Specifically, we suggest that 90
days is excessively high and will disqualify many otherwise-healthy organizations. 60 days is respectfully suggested to offset the necessary
spending of reserves.
Cash to Debt Ratio
For the same reason asserted in the immediately preceding paragraph, we suggest that the cash to debt ratio of 65% required of borrowers in
the term sheets is a disqualifier of nonprofits, which were economically healthy pre-virus. See: Eligible Borrower point 8 for both NOELF and
NONLF. Our several nonprofit clients respectfully suggest 50% is expressive of financial health and viability of successful organizations
required to spend significant reserves during government closure mandates.
Upgrade Attractiveness of Loan Economics
Fundamental economic circumstances of nonprofits post-virus require more aggressive loan economics. The most well run of nonprofits are
regardless battered from the denial of revenues and the immediate re-opening circumstances. Loan economics appropriate for for-profit
organizations are not sufficient to assist nonprofits return to health operations, specifically:
Maturity. Eligible Loans point 1 in the term sheets should increase maturity to between 7 and 10 years, to be negotiated by the lender and
borrower.
Seven-Year Amortization and 40% Balloon Payment. Even with a 2-year delay, a 70% balloon at the end of a 3-year payment structure is
frightening to nonprofit leaders and foreshadows simultaneous crises. A sound approach would extend the payment structure for 5 years (in
addition to the 2-year delay) by paying 15% for years three through six and reducing the balloon to 40%. See: Eligible Loans point 3 in both
NOELF and NONLF.
LIBOR+200. Eligible Loans point 4 in both NOELF and NONLF should be reduced from LIBOR+300 to LIBOR+200.
Required Borrower Certifications and Covenants
We respect the public policy to restrict repayment of principal balances of debts until the upsized tranche or new Eligible Loan is paid in full.
However, in order to survive during the period between the shutdowns and the potential for NOELF and NONLF funds to flow, nonprofits had
no choice other than to commit to lines of credit that were related to COVID. We respectfully request that these lines of credit be eligible for
payment on an equitable basis. See: Dot point 1 to Required Borrower Certifications in both NOELF and NONLF.
Transaction and Servicing Fees
Staff Group - Main Robust transaction and servicing fees, so necessary to attract the interest of institutions to lend in the for-profit setting, are less important in the
Street Lending nonprofit setting given moral suasion. Nonprofits are cash-depleted and need to receive the maximum possible cash loan amounts.
Program - Nonprofit We respectfully request a 100 basis points cap on the combined transaction and upsizing/origination servicing fees. See: Transaction Fee and
Organization PIO (Email 6/22/2020 cburkhardt@btl Barnes & Loan Upsizing/Origination Servicing Fees for both NOELF and NONLF.
Facilities from Web) 12:00:00 AM Burkhardt Craig aw.com Thornburg LLP
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Staff Group - Main
Street Lending Virginia G.
Program - Nonprofit Piper Please make additional funds available that are specifically earmarked for nonprofits and design the process to specifically serve that group of
Organization PIO (Email 6/22/2020 csilva@pipertru Charitable organizations.
Facilities from Web) 12:00:00 AM Silva Chloe st.org Trust
The criteria for non-profit eligible borrowers includes a requirement that the borrower have been in continuous operation since January 1, 2015.
This requirement appears to disqualify otherwise credit worthy borrowers unnecessarily. For example, if a well-established credit worthy non
profit hospital were to undergo a change of ownership or a reorganization that includes the transfer of its operations to an entity formed less
than 5 years ago, that new entity would not have been existence continuously for 5 years, despite otherwise being credit worthy and continuing
Staff Group - Main the historic operations of the hospital that had been occurring for more than 5 years. We note that the requirement for other organizations is
Street Lending much more lenient, only requiring them to be in existence prior to March 2020 to be eligible to participate in the Main Street Lending Program.
Program - Nonprofit Baker Imposing this 5 year age requirement for non-profit organizations is contrary to the Federal Reserve's stated intent in providing facilities to
Organization PIO (Email 6/22/2020 Donelson jprester@baker Baker assist credit worthy borrowers through these challenging times.
Facilities from Web) 12:00:00 AM Prester Attn: donelson.com Donelson
Staff Group - Main We'd like the to see this program allow for refinancing an existing loan and for the minimum staff size to be 12 -15 people.
Street Lending Also, having 3 years of financials would be preferred.
Program - Nonprofit acalbert@natio National We had to furlough more than half of our staff because of COVID. We now have a staff of 12. We wouldn't be able to rehire and get back
Organization PIO (Email 6/22/2020 nalchildrensmu Childres to full staffing without a program like this.
Facilities from Web) 12:00:00 AM Calbert A. seum.org Museum
The non-profit agency I work for has a 100 year history of helping families in Massachusetts. Last year, we delivered home visiting services to
over 15,000 infants and toddlers. Our skilled staff of 864 professionals made this possible. And yet, because there are more than 500 of us, we
were left without support for sick leave, paycheck protection, and forgivable loans. We are held to different criteria for the employee retention
credit. We are left out of the economic stimulus that is essential for our organization's survival.
The lack of cash flow to our agency and others like ours has led to job loss and has delayed job creation. The longer term impact is that
communities, families, and our service sector will suffer for decades. Across the country, programs like ours are closing, furloughing staff, and
stopping services to children who need our help.
With access to favorable lending terms and with the same stimulus funding that was offered to smaller non-profits, we could start calling back
to work our furloughed staff. We could continue to support children and families. We could avoid an erosion of our social service sector.
Necessarily, however, the eligibility criteria ratio of, "adjusted 2019 EBIDA to unrestricted 2019 operating revenue, greater than or equal
Staff Group - Main to 5%", excludes nearly every social service nonprofit known to us. This criteria is burdensome, unnecessary, and rewards nonprofit
Street Lending Thom Anne agencies that have chosen to retain a high earnings margin. To support nonprofits and economic recovery, this criteria must be removed.
Program - Nonprofit SullivanEarly Thank you for your time and consideration.
Organization PIO (Email 6/22/2020 mmahoney@th Childhood Margaret Mahoney
Facilities from Web) 12:00:00 AM Mahoney Margaret omchild.org Programs
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
We recommend the following considerations as the Federal Reserve Bank further develops and execute this Main Street Lending Program as
we recover our American economy.
Maintaining transparency in the Main Street Lending process. As other federal facilities have been rolled out the issue of transparency has
been a major concern in order to assure that minority-owned small businesses are being funded. According to The Central Bank, it would be a
solid transparent practice as this lending is deployed to require lenders and borrowers participating in the program to report the following:
Name of lenders
Name of business/borrower
Ethnicity of the business if certified or of the borrower
Loan Amount borrowed
Loan interest rates charged by the lender
Mitigating complications for borrowers, as currently structured the business applying for a loan must not be in an "lneligible
Business" as described in the Small Business Administration's regulations concerning Paycheck Protection Program (PPP) loans.
Many businesses were denied for PPP loans because of technical issues such as having a minority part of a company or being owned by a
private equity firm with investor voting rights. It would be detrimental if the rules that didn't allow these types of businesses to access PPP
funding are exported to this program which targets businesses that could not secure PPP loans due to company makeup or structure.
Furthermore, currently any business applying for Main Street Lending must not have received specific support pursuant to the CARES Act.
Many businesses who applied for PPP loans had their applications accepted but only received a small, insufficient amount and were unable to
contest the decision. There are many businesses who received "some" help from the SBA who are still in urgent need of economic
relief to keep their doors open and continue down the path of recovery.
Establish a technical assistance Main Street Lending Grant Program, the Federal Reserve should consider a set aside grant program of at
least $500 million to $1 billion to create a program where industry associations and chambers of commerce can apply for funding to help with
technical assistance for businesses who are in need of this money. We have learned from the PPP and EDIL process that many borrowers are
overwhelmed with these applications and overall lending processes and need assistance in accessing portals, the right lending institution for
there respective business, and guidance in gathering documentation to get approved and funded. The Federal Reserve needs to collaborate
with organizations who have trusted local reputations and the ability to provide this help one-on-one with their members and other constituents
Staff Group - Main who could quality for these facilities. Furthermore, these groups will help the overall credibility of the program especially with lenders and
Street Lending United States borrowers in minority communities.
Program - Nonprofit Hispanic
Organization PIO (Email 6/22/2020 Cavazos- LCavazos@us Chamber of Thank you in advance for your consideration in this important matter.
Facilities from Web) 12:00:00 AM Reyna C LeRoy hcc.com Commerce
The non-profit agency I help lead has a 100 year history of helping families in Massachusetts. Last year, we delivered home visiting services to
over 15,000 infants and toddlers. Our skilled staff of 864 professionals made this possible. And yet, because there are more than 500 of us, we
were left without support for sick leave, paycheck protection, and forgivable loans. We are held to different criteria for the employee retention
credit. We are left out of the economic stimulus that is essential for our organization's survival.
The lack of cash flow to our agency and others like ours has led to job loss and has delayed job creation. The longer term impact is that
communities, families, and our service sector will suffer for decades. Across the country, programs like ours are closing, furloughing staff, and
stopping services to children who need our help.
With access to favorable lending terms and with the same stimulus funding that was offered to smaller non-profits, we could start calling back
Staff Group - Main to work our furloughed staff. We could continue to support children and families. We could avoid an erosion of our social service sector.
Street Lending Necessarily, however, the eligibility criteria ratio of, "adjusted 2019 EBIDA to unrestricted 2019 operating revenue, greater than or equal
Program - Nonprofit Thom Child to 5%", excludes nearly every social service nonprofit known to us. This criteria is burdensome, unnecessary, and rewards nonprofit
Organization PIO (Email 6/22/2020 klapan@thomc and Family agencies that have chosen to retain a high earnings margin. To support nonprofits and economic recovery, this criteria must be removed.
Facilities from Web) 12:00:00 AM LaPan Karen hild.org Services
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Monday, June 22, 2020
Re: Proposed Main Street Lending Program Nonprofit Loan Options
Dear Sir or Madam:
The Association for Enterprise Opportunity (AEO) appreciates the opportunity to respond to the Federal Reserve Bank of Boston's
(Federal Reserve) request for public feedback on the proposal to expand the Main Street Lending Program (MSLP) to accommodate nonprofit
organizations that were impacted by the economic downturn caused by the Coronavirus pandemic.
AEO is the leading voice of innovation in microfinance and microbusiness in the United States. Our more than 1,700 members and partners
include a broad range of organizations that provide capital and services to assist underserved entrepreneurs in starting, stabilizing, and
expanding their businesses.
Last week, the Federal Reserve announced the start of operations on the Main Street Lending Program, a measure created by the Coronavirus
Aid, Relief, and Economic Security (CARES) Act to further support small and medium-sized businesses disrupted by the onset of the national
health crisis. As of now, the program will deploy liquidity to eligible participants through three (3) facilities: the Main Street New Loan Facility
(MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF). In an effort to expand the
reach of the program's current infrastructure, the Federal Bank has proposed the inclusion of nonprofit organizations.
The Federal Reserve, in collaboration with the Department of Treasury, is pursuing public feedback on the implementation of two new facilities
that will provide access to credit for nonprofit organizations. The proposed expansion would offer liquidity to small and medium-sized nonprofits
through the Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF). Under the
proposed rules, eligible nonprofit lenders will have the aptitude to deploy millions in additional federal assistance to help businesses continue
on the road to financial recovery.
As noted by the Federal Reserve Chair, Jerome H. Powell, "Nonprofit organizations play a critical role in the national economy and local
communities by providing essential services, employing millions of Americans, and supporting the innovation and development of skilled a
workforce." We believe that the country's network of nonprofits can help mitigate the financial damage done to small businesses in
recent months.
To that end, we are weighing in on the Federal Reserve's proposal to expand the MSLP. As it stands, we support the proposal as it is
slated to safeguard Mainstreet firms and help slow the national unemployment rate. With the minimum loan size proposed at $250,000 and the
maximum loan size of $300 million, nonprofit loan borrowers would be better positioned to achieve financial resilience following the devastating
first and second quarter of this year.
Notwithstanding AEO's broad support of the proposal, we urge the Federal Reserve Bank to modify its plan to expand the MSLP to
include nonprofit entities beyond 501(c)(3) or 501(c)(19) organizations. The Federal Reserve should consider expanding the proposal to
501(c)(4), 501(c)(6), and 501(c)(7), among others. This action would dilate necessary support for additional small and medium-sized nonprofit
firms in the weeks and months ahead.
Thank you for the opportunity to submit comments on this topic and for your willingness to listen to our feedback on the matter.
Sincerely,
Staff Group - Main
Street Lending Association for Connie Evans
Program - Nonprofit Enterprise President & CEO
Organization PIO (Email 6/22/2020 jp2@prismgrou Opportunity Association for Enterprise Opportunity
Facilities from Web) 12:00:00 AM Evans Connie p.global JAEO)
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
June 22, 2020
Steven Mnuchin
Secretary of the Treasury
Submitted via e-mail
Subject: Main Street Lending Program
Dear Secretary Mnuchin:
On behalf of our 1,370 community health centers (CHCs) and 7.2 million patients they serve here in California, the California Primary Care
Association (CPCA) writes to comment on the "Main Street Lending Program" recently established under authority of the CARES
Act. As explained below, we appreciate the Federal Reserve's intention to expand Main Street Loans to non-profit organizations.
However, after analyzing the draft Term Sheet, we have determined that almost no federally qualified health centers (FQHCs) would qualify for
these loans under the current eligibility requirements. Therefore, we are requesting that:
the loan terms be revised to enable the majority of FQHCs to qualify, and
FQHCs be permitted to work with Community Development Financial Institutions (CDFIs) to access Main Street loans, as CDFIs understand
the unique FQHC model and collectively have provided more than $2.1 billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
As community-based, non-profit organizations committed to ensuring access to health care, FQHCs have been on the frontlines of the COVID-
19 pandemic since the beginning. With more than 12,000 care delivery sites nationally, FQHCs provide care for nearly 30 million patients. In
California, where our health centers serve 7.2 million patients annually - almost 17% of Californians turn to health centers for their care. During
a public health emergency, health centers provide triage, treatment, referrals and also work in partnership with the local health departments
and the state of California. This crisis is no different - CHCs are uniquely positioned to assist in the fight against the spread of COVID-19
because they are rooted in the communities they serve and are trusted sources of care for anyone that walks through their doors. Community
health centers, especially when better resourced and supported by our state and federal partners, have the potential to unburden our hospital
partners who need to be ready and available for the sickest Californians.
Throughout the pandemic, FQHCs have provided a range of critical front-line care and a growing proportion of testing, particularly in the low-
income, minority communities they serve. Community health centers are taking a huge financial hit as they transition their organizations to
rapidly respond to the need for the screening, testing, and treating of COVID-19 patients, while also continuing to address the urgent, non-
COVID-19 related needs of the vulnerable patients they serve. Health center leaders are making decisions in real time as public health
directives and community, city, and state mitigation efforts have led to the curtailing of non-urgent services and sites, causing revenues to
plummet precipitously, layoffs, site closures and threatening patient access to their full range of services.
While some of our health centers have received federal funding to support COVID-19 relief, for many this support is not enough to reestablish
their pre-COVID level of operations, let alone prepare for the increased demand that will result as millions of newly-unemployed and uninsured
individuals turn to them for care. To date, the Provider Relief Fund has offered most FQHCs only 2% of their net patient revenues. FQHCs with
over 500 staff - which in total care for about 9 million patients- are ineligible for Paycheck Protection Loans because of their size and are
struggling to secure alternative funds to alleviate the financial strain due to COVID-19.
Recommendation to expand eligibility criteria to allow majority of FQHCs to qualify:
CPCA was relieved to hear that the Small Business Administration will soon make Main Street Loans available to non-profit organizations with
50 to 15,000 employees, but after reviewing the Terms Sheet, we determined that almost no FQHCs would qualify under the proposed
eligibility criteria.
This conclusion is based on an analysis conducted by Capital Link, a non-profit organization that receives funding from the Federal Department
of Health and Human Services to assist FQHCs with accessing capital. Capital Link determined that under the proposed lending parameters:
Prior to the pandemic, only 13% of health centers would have met the combined criteria. This includes less than one in five of the FQHCs with
Staff Group - Main
Street Lending over 500 staff, who are currently ineligible for the Paycheck Protection Program.
Program - Nonprofit California Because of the significant cash declines experienced by FQHCs as a result of COVID-19, at present, far fewer than 13% would be able to
Organization PIO (Email 6/22/2020 mvismara@cpc Primary Care meet the DCOH and Cash/Debt ratio at loan origination.
Facilities from Web) 12:00:00 AM Vismara Marissa a.org Association
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
The most problematic financial parameters for FQHCs are:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 5%
Days cash on hand at loan origination equal to or greater than 90 days
Ratio of unrestricted cash and investments to outstanding debt (including Main Street debt and CMS Accelerated and Advance Payments) at
origination is 65% or greater
In order to provide a meaningful program for which approximately 60% of FQHCs would qualify, we request that the Federal Reserve adjust
the following lending parameters for FQHCs loans as follows:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 3%
Days cash on hand at loan origination equal to or greater than 30 days
Eliminate the unrestricted cash to debt ratio requirement
Lower the minimum employee requirement to 20
In addition, we ask that the Federal Reserve clarify the eligibility requirement that reads: "has not received specific support pursuant to
the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)." As you know, Section 4003 of Title IV
authorizes the Federal government to make loans to States and municipalities for COVID-19 relief. It is possible that a state or municipality
could receive a loan under Section 4003, and use part of it to support FQHCs or other safety net providers. To make clear that FQHCs or other
providers who receive this type of support from their state are still eligible for Main Street Loans, we recommend that the term "specific
support" be revised to read "direct support."
Request for FQHCs to work directly with CDFIs to access Main Street Loans:
Finally, it is important to note that Community Development Financial Institutions (CDFIs) have historically played a major role in providing
financing to FQHCs for decades. As such, they understand the FQHC model and are best positioned to underwrite loans to health centers. A
coalition of 25 CDFIs who are members of the Lenders Coalition for Community Health Centers have collectively provided more than $2.1
billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
Unfortunately, very few CDFIs would qualify as eligible lenders under the program as it is currently construed. To enable FQHCs to work
directly with lenders who best understand their model and needs, we recommend that the Federal Reserve structure the nonprofit portion of
the Main Street Loan Program to:
Allow CDFIs to participate as lenders in the program; and
Allow CDFIs to borrow from the Federal Reserve under the same terms as banks, which would enable CDFIs to offer interest rates to FQHCs
at LIBOR +3%
Thank you for your attention.
Sincerely,
Carmela Castellano Garcia, Esq.
President and CEO
California Primary Care Association
Please consider including 501 c6 organizations. Or at the very least allowing for Chamber of Commerce to apply for an exception. Local
Chambers bring in billions to small businesses around the country every year, and we've been just as hurt by Covid-19 as any other
Staff Group - Main business. Despite that we've been unable to apply for any Federal program due to our c6 status. So again, I ask that you consider
Street Lending allowing for an exception to be made for local chambers.
Program - Nonprofit
Organization PIO (Email 6/22/2020 drenner@mono Thank you.
Facilities from Web) 12:00:00 AM Renner Devin naeastside.com MESBA
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
To whom it may concern,
Here are my comments related to the Main Street Lending Program for Nonprofits:
1. The proposal has a requirement to have an EBIDA of 5% of operating revenue in 2019. The 5% threshold is onerous for nonprofits as they
are focused on utilizing all resources to advance their mission. Also mark-to-market gains and losses on investments and derivatives (e.g.,
interest rate swaps, foreign exchange contracts) would be included in EBIDA and can vary dramatically from year to year but do not represent
cash gains and losses. These mark-to-market gains and losses should be excluded from EBIDA. My recommendation would be to require a
positive EBIDA excluding mark-to-market gains and losses on investments and derivatives.
2. The proposal requires a level of liquid assets to cover 90 days of prior year expenses. I would recommend using the current level of
expenses. In our situation we have reduced our expenses dramatically due to the impact of COVID-19 and it is no longer possible to cover 90
days of the prior year's expense levels. Even covering 90 days of current expense levels will be difficult for most nonprofits since they
have had to deplete their cash to try and survive.
3. The proposal requires a liquidity ratio of 65%. There should be no liquidity ratio requirement since organizations that need this loan have
likely depleted their liquidity significantly and is the reason they need borrow under this program.
4. The proposed rate of LIBOR + 300bp seems a bit steep given the distressed situation of organizations that are likely to need to borrow
under this program. LIBOR + 100-150bp would be more reasonable.
5. The proposed rules prohibit unscheduled paydowns of other debt before this debt is paid off. This should not apply to asset secured debt
(e.g., mortgage). If such an asset is sold, you must pay off the mortgage, for example.
I know my comments are contrary to normal practice but these are not normal times and nonprofits desperately need help in order to survive.
Staff Group - Main Regards,
Street Lending Tim Propp
Program - Nonprofit Chief Operating Officer
Organization PIO (Email 6/22/2020 tpropp@ciee.or CIEE, Inc.
Facilities from Web) 12:00:00 AM Propp Work 9 CIEE, Inc.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
June 22, 2020
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue N.W.
Washington, DC 20551
RE: Main Street Lending Program - NONLF and NOELF
To the Board of Governors:
On behalf of University Hospital I appreciate the opportunity to offer comments concerning the Federal Reserve's proposed expansion of
its Main Street Lending Program to provide access to credit for 501(c)(3) and 501(c)(19) nonprofit organizations under the Nonprofit
Organization New Loan Facility and related lending facilities (collectively, the "Facility").
In hard-hit states like New Jersey, nonprofit hospitals, like University Hospital, have been financially devastated by lost revenues and additional
spending necessitated by the COVID-19 pandemic. Based in Newark, New Jersey, University Hospital was established under State statute as
a "non-profit, legal entity,Xquot; public teaching hospital and as an "instrumentality" of the State of New Jersey,
"providing essential governmental functions necessary for the welfare and health of the State and the people of New Jersey." See,
New Jersey Medical and Health Sciences Education Restructuring Act, P.L. 2012, c.45. University Hospital is a safety-net hospital and Level I
Trauma Center serving the most vulnerable communities in the Newark region and the populations most impacted by the pandemic.
Eligibility criteria under the Facility is presently limited to registered 501(c)(3) charitable, religious and church and 501(c)(19) veterans'
and related auxiliary nonprofit organizations. As noted above, University Hospital is a nonprofit entity under State statute and, as is typical for
many quasi-governmental entities, is not registered with the Internal Revenue Service as a nonprofit organization. We note for the Federal
Reserve's consideration that the Internal Revenue Service has classified quasi-governmental entities such as University Hospital as
falling under Section 115(1) of the Internal Revenue Code ("IRC"), and that 115(1) entities may also qualify under Section 501(c)(3)
given the similarities of purpose between these designations. Under the IRC, the principal distinction between a 115(1) and a 501 (c)(3) entity is
the tax treatment and deductibility of donations and gifts, not necessarily the substantive activities of the entities. For example, a
"charitable" 501 (c)(3) organization under the IRC may be an entity whose mission is to, "provide relief to the poor, distressed
or underprivileged or combating community deterioration." See, https : //www.irs.gov/charities-non-profits/charitable-
organizations/exempt-purposes-internal-revenue-code-section-501c3 . University Hospital, whether or not registered as a 501(c)(3) or 115(1)
entity, is charged with, and on a daily basis, prosecutes a substantially similar mission.
The published term sheet for the Facility contemplates other forms of organization for inclusion, at the discretion of the Federal Reserve.
University Hospital is interested in participating in this lending opportunity to help it address urgent near term liquidity needs and to stabilize its
finances while it works to reestablish operating revenues and recalibrate expenses. As an institution we take great pride in the fact that we
provide care in underserved communities, which have suffered disproportionately due to the effects of this pandemic. Collectively we urge the
Federal Reserve to not allow form to prevail over substance, and respectfully request that the Federal Reserve exercise its discretion to allow
public, nonprofit hospitals like University Hospital to be eligible to apply for this lending opportunity.
University Hospital truly appreciates your consideration of this issue. If there are any questions that may arise from this letter of comment the
Board should not hesitate to reach me at akhterar@uhnj.org.
Staff Group - Main Sincerely,
Street Lending Assad Akhter
Program - Nonprofit Manager of Government Affairs,
Organization PIO (Email 6/22/2020 akhterar@uhnj. University University Hospital
Facilities from Web) 12:00:00 AM Akhter Assad org Hospital
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
To Whom It May Concern,
The Association for Utah Community Health (AUCH) is writing on behalf of our entire organization and its member Health Centers, also known
as Federally Qualified Health Centers (FQHCs). FQHCs are a community-based, non-profit organizations whose goal is to provide affordable,
accessible health care for all individuals, regardless of their ability to pay. As explained below, we appreciate the Federal Reserve's
intention to expand Main Street Loans to non-profit organizations; however, after analyzing the draft Term Sheet, we have determined that
almost no FQHCs would qualify for these loans under the current eligibility requirements. Therefore, we are requesting that:
the loan terms be revised to enable the majority of FQHCs to qualify, and
FQHCs be permitted to work with Community Development Financial Institutions (CDFIs) to access Main Street loans, as CDFIs understand
the unique FQHC model and collectively have provided more than $2.1 billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
Background on Utah's FQHCs and the COVID-19 Pandemic
FQHCs provide high-quality primary and preventative care, dental care, behavioral health, substance use disorder (SUD) treatment, pharmacy
services and other supportive services to rural and underserved communities. FQHCs provide services to all patients regardless of their
insurance status or ability to pay. Utah has 13 FQHC organizations with 54 clinic locations across the state, serving more than 166,000
patients annually. FQHCs employ approximately 1,178 Utahns and create $298 million in economic impact in the state.
Following CDC guidelines, FQHCs across Utah suspended in-person well visits, non-emergency dental, and behavioral health and SUD
services at the onset of the COVID-19 pandemic. Currently, FQHCs are transitioning back to providing in-clinic services, but are still operating
below capacity. FQHCs in Utah experienced dips in utilization ranging from 30-70% from March through May, resulting in large revenue losses
that are predicted to continue through the end of 2020 and into 2021.
While FQHCs have received some Federal funding to support COVID relief, for many FQHCs this funding is not enough to reestablish their
pre-COVID level of operations, let alone prepare for the increased demand that will result as millions of newly-unemployed and uninsured
individuals turn to them for care. To date, the Provider Relief Fund has offered most Health FQHCs only 2% of their net patient revenues; also,
FQHCs with over 500 staff - which in total care for about 9 million patients - are ineligible for Paycheck Protection Loans because of their size.
At the same time, FQHCs have partnered with the Utah Department of Health to expand testing to high-need areas. Through this partnership
with UDOH, five of Utah's Health Centers offer drive-thru testing to the general public at seven sites in geographic locations with few or
no testing sites, and/or that have large high-risk patient populations. Health Centers have also promoted education and awareness, provided
masks, and participated and hosted food drives in their communities. They have also quickly expanded their telehealth capacity to continue
care for chronically ill and high-risk patients.
Recommendation to expand eligibility criteria to allow majority of FQHCs to qualify:
Because of these financial needs, AUCH and FQHCs were relieved to learn that the Federal Reserve would soon start offering Main Street
Loans to non-profits. However, after reviewing the proposed Terms Sheet and consulting with experts , we have concluded that almost no
FQHCs would qualify under the proposed eligibility criteria.
This conclusion is based on an analysis conducted by Capital Link, a non-profit organization that receives funding from the Federal Department
of Health and Human Services to assist FQHCs with accessing capital. Capital Link determined that under the proposed lending parameters:
Prior to the pandemic, only 13% of health centers would have met the combined criteria. This includes less than one in five of the FQHCs with
over 500 staff, who are currently ineligible for the Paycheck Protection Program.
Because of the significant cash declines experienced by FQHCs as a result of COVID-19, at present, far fewer than 13% would be able to
meet the DCOH and Cash/Debt ratio at loan origination.
The most problematic financial parameters for FQHCs are:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 5%
Staff Group - Main
Street Lending Association for Days cash on hand at loan origination equal to or greater than 90 days
Program - Nonprofit Utah Ratio of unrestricted cash and investments to outstanding debt (including Main Street debt and CMS Accelerated and Advance Payments) at
Organization PIO (Email 6/22/2020 rcraig@auch.or Community origination is 65% or greater
Facilities from Web) 12:00:00 AM Craig Rachel 9 Health
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
In order to provide a meaningful program for which approximately 60% of FQHCs would qualify, we request that the Federal Reserve adjust
the following lending parameters for FQHCs loans as follows:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 3%
Days cash on hand at loan origination equal to or greater than 30 days
Eliminate the unrestricted cash to debt ratio requirement
Lower the minimum employee requirement to 20.
In addition, we ask that the Federal Reserve clarify the eligibility requirement that reads: "has not received specific support pursuant to
the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)." As you know, Section 4003 of Title IV
authorizes the Federal government to make loans to States and municipalities for COVID-19 relief. It is possible that a state or municipality
could receive a loan under Section 4003, and use part of it to support FQHCs or other safety net providers. To make clear that FQHCs or other
providers who receive this type of support from their state are still eligible for Main Street Loans, we recommend that the term "specific
support" be revised to read "direct support."
Request for FQHCs to work directly with CDFIs to access Main Street Loans
Finally, it is important to note that Community Development Financial Institutions (CDFIs) have historically played a major role in providing
financing to FQHCs for decades. As such, they understand the FQHC model and are best positioned to underwrite loans to health centers. A
coalition of 25 CDFIs who are members of the Lenders Coalition for Community Health Centers have collectively provided more than $2.1
billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
Unfortunately, very few CDFIs would qualify as eligible lenders under the program as it is currently construed. To enable FQHCs to work
directly with lenders who best understand their model and needs, we recommend that the Federal Reserve structure the nonprofit portion of
the Main Street Loan Program to:
Allow CDFIs to participate as lenders in the program; and
Allow CDFIs to borrow from the Federal Reserve under the same terms as banks, which would enable CDFIs to offer interest rates to FQHCs
at LIBOR +3%
We are providing these comments on short notice to accommodate the Federal Reserve's request. We would be happy to provide more
detailed comments and/or provide additional information to assist the Federal Reserve in developing a program that will be responsive to the
current needs of Federally Qualified Health Centers.
Sincerely,
Alan Pruhs
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
The National Community Stabilization Trust (NCST) is a non-profit organization that works to restore vacant and abandoned properties to
productive use and protect neighborhoods from blight. We do this work through our partnership with a network of over 300 single-family
affordable housing developers, the majority of which are small, nonprofit, business entities.
NCST works with these nonprofit developers in two primary ways: first, by facilitating the sale of foreclosed properties to these entities through
our REOMatch® platform, and second, by creating and administering loan funds that support the acquisition and rehab of single-family
housing by for- and non-profit organizations. The REO Capital Fund - a subsidiary of NCST that provided financing for the acquisition and
rehabilitation of distressed property -made over $61 million in loans to twenty-two community-based organizations between 2019 and 2019,
facilitating the acquisition and rehabilitation of over 660 units of previously distressed housing. NCST is also in the process of creating a loan
fund to support small single-family developers in Baltimore City.
Based on our 12 years of experience partnering with these organizations, we know that giving nonprofits access to affordable capital
strengthens local economies and helps these organizations create affordable housing and revitalize communities. Unfortunately, the vast
majority of our local partners will be shut out of the Main Street Lending Program simply because they have fewer than 50 employees. The
same will be true for countless other non-profits who develop or rehabilitate affordable homes across our country.
Excluding nonprofit entities such as affordable housing developers is especially puzzling given that these nonprofits are financially
sophisticated entities that are particularly hard hit by COVID -- both due to general economic conditions and foreclosure moratoria that are
preventing them from obtaining inventory to rehab and resell. These entities need access to flexible capital as much if not more so larger
nonprofits. Not only are they equally creditworthy, but they contribute to their communities by providing both jobs and affordable housing at a
time when both are in extremely short supply.
Consequently, we urge the Federal Reserve to rethink the proposed requirement that eligible borrowers have at least 50 employees. The
Federal Reserve should either replace that requirement with another measurement of creditworthiness, such as the strength of the
organization's balance sheet, or - if that is not feasible - create a special program set-aside for other, larger lenders to subsequently lend
to organizations like these developers. Productive, small nonprofits should not be excluded from this important source of financial support
solely due to the size of their payroll.
Furthermore, we encourage the Federal Reserve to encourage and monitor lender use of non-traditional underwriting. Nonprofit entities
sometimes need to be underwritten in creative ways that account for their unique organizational structures and strengths, offer flexible loan
structures and terms, and limit personal guarantees.
Staff Group - Main
Street Lending Thank you for the opportunity to comment, and please do not hesitate to be in touch if you have any questions.
Program - Nonprofit
Organization PIO (Email 6/22/2020 rreddie@stabili The National Community Stabilization Trust
Facilities from Web) 12:00:00 AM Reddie Racquel zationtrust.org
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
June 22, 2020
Steven Mnuchin
Secretary of the Treasury
Submitted via e-mail
Re: Main Street Lending Program
Dear Secretary Mnuchin:
We are writing on behalf of AltaMed Health Services. Federally Qualified Health Centers (FQHCs) are community-based safety net, non-profit
organizations whose goal is to provide affordable, accessible health care for all individuals, regardless of their ability to pay. We have been on
the front line of this pandemic providing essential healthcare services to the nation's most medically underserved communities. As
explained below, we appreciate the Federal Reserve's intention to expand Main Street Loans to non-profit organizations; however, after
analyzing the draft Term Sheet, we have determined that almost no FQHCs would qualify for these loans under the current eligibility
requirements. Therefore, we are requesting that:
the loan terms be revised to enable the majority of FQHCs to qualify, and
FQHCs be permitted to work with Community Development Financial Institutions (CDFIs) to access Main Street loans, as CDFIs understand
the unique FQHC model and collectively have provided more than $2.1 billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
As the largest independent Federally Qualified Health Center (FQHC) in California and one of the largest in the nation, AltaMed has been
providing quality health and human services to individuals and families in Southern California for 50 years through an integrated world-class
delivery system. AltaMed provides care to over 300,000 patients through 1 million encounters annually at more than 50 service sites in Los
Angeles and Orange Counties. Our services include a full continuum of care including pediatrics, complete primary care, obstetrics and
gynecology, senior services with PACE programs, dental care, youth services, and HIV/AIDS services.
During this pandemic, AltaMed has remained committed to serving our most vulnerable communities and expanding access to quality health
care. Through May 31, 2020, AltaMed experienced $15 million in losses and we expect to lose an additional $25 million by the end of 2020,
totaling $40 million. Of the expected 2020 losses, $24 million is for medical and $16 million is for dental services.
Even though FQHCs have received some federal funding to support COVID relief, for many of us this funding is not enough to reestablish our
pre-COVID level of operations, let alone prepare for the increased demand that will result as millions of newly-unemployed and uninsured
individuals seeking care. Thus far, the Provider Relief Fund has offered most FQHCs only 2% of their net patient revenues and FQHCs with
over 500 staff like AltaMed are ineligible for Paycheck Protection Program (PPP) Loans due to our size.
Because of these financial needs, AltaMed was relieved to learn that the Federal Reserve would soon start offering Main Street Loans to non
profits. However, after reviewing the proposed Terms Sheet and consulting with experts, we have concluded that almost no FQHCs would
qualify under the proposed eligibility criteria.
This conclusion is based on an analysis conducted by Capital Link, a non-profit organization that receives funding from the Federal Department
of Health and Human Services to assist FQHCs with accessing capital. Capital Link determined that under the proposed lending parameters:
Prior to the pandemic, only 13% of health centers would have met the combined criteria. This includes less than one in five of the FQHCs with
over 500 staff, who are currently ineligible for the PPP.
Because of the significant cash declines experienced by FQHCs as a result of COVID-19, at present, far fewer than 13% would be able to
meet the DCOH and Cash/Debt ratio at loan origination.
Staff Group - Main
Street Lending The most problematic financial parameters for FQHCs are:
Program - Nonprofit EBIDA to unrestricted 2019 operating revenue greater than or equal to 5%
Organization PIO (Email 6/22/2020 bconstant@alta AltaMed Health Days cash on hand at loan origination equal to or greater than 90 days
Facilities from Web) 12:00:00 AM Constant Berenice med.org Services Ratio of unrestricted cash and investments to outstanding debt (including Main Street debt and CMS Accelerated and Advance Payments) at
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
origination is 65% or greater
In order to provide a meaningful program for which approximately 60% of FQHCs would qualify, we request that the Federal Reserve adjust
the following lending parameters for FQHCs loans as follows:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 3%
Days cash on hand at loan origination equal to or greater than 30 days
Eliminate the unrestricted cash to debt ratio requirement
Lower the minimum employee requirement to 20.
In addition, we ask that the Federal Reserve clarify the eligibility requirement that reads: "has not received specific support pursuant to
the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)." Section 4003 of Title IV authorizes the
federal government to make loans to states and municipalities for COVID-19 relief. It is possible that a state or municipality could receive a
loan under Section 4003, and use part of it to support FQHCs or other safety net providers. To make clear that FQHCs or other providers who
receive this type of support from their state are still eligible for Main Street Loans, we recommend that the term "specific support" be
revised to read "direct support."
Further, we also ask that you extend the same loan forgiveness protections that were provided to all PPP recipients, to recipients of the Main
Street Lending Program, especially for essential healthcare providers that have been on the front lines of this pandemic. Not doing so would
not be in alignment with PPP previously established loan practices and would unfairly exclude organizations with 500 staff or more from
benefiting fully from this program.
Finally, it is important to note that Community Development Financial Institutions (CDFIs) have historically played a major role in providing
financing to FQHCs for decades. As such, they understand the FQHC model and are best positioned to underwrite loans to health centers. A
coalition of 25 CDFIs who are members of the Lenders Coalition for Community Health Centers have collectively provided more than $2.1
billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
Unfortunately, very few CDFIs would qualify as eligible lenders under the program as it is currently construed. To enable FQHCs to work
directly with lenders who best understand their model and needs, we recommend that the Federal Reserve structure the non-profit portion of
the Main Street Loan Program to:
Allow CDFIs to participate as lenders in the program; and
Allow CDFIs to borrow from the Federal Reserve under the same terms as banks, which would enable CDFIs to offer interest rates to FQHCs
at LIBOR +3%
We are providing these comments on short notice to accommodate the Federal Reserve's request. We are happy to provide more
detailed comments and/or provide additional information to assist the Federal Reserve in developing a program that will be responsive to the
current needs of FQHCs.
We thank you for your attention to this important matter and consideration.
Sincerely,
Cástulo de la Rocha, J.D.
President & CEO
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
We are writing on behalf of Fort Bend Family Health Center, Inc. dba AccessHealth (Here after refered to as AccessHealth). FQHCs are a
community-based, non-profit organizations whose goal is to provide affordable, accessible health care for all individuals, regardless of their
ability to pay. As explained below, we appreciate the Federal Reserve's intention to expand Main Street Loans to non-profit organizations;
however, after analyzing the draft Term Sheet, we have determined that almost no FQHCs would qualify for these loans under the current
eligibility requirements. Therefore, we are requesting that:
the loan terms be revised to enable the majority of FQHCs to qualify, and
FQHCs be permitted to work with Community Development Financial Institutions (CDFIs) to access Main Street loans, as CDFIs understand
the unique FQHC model and collectively have provided more than $2.1 billion in loans to FQHCs, with a default rate of less than 1/10th of 1%.
Background on Fort Bend Family Health Center, Inc. dba AccessHealth and the COVID-19 Pandemic
AccessHealth serves 19,000 clients primarily from Fort Bend and Waller Counties in Southeast Texas. Some 98% of our clients are below
200% of the federal poverty line and 55% of them are uninsured. AccessHealth experienced an approximate 50% dip in patient service
revenue beginning in March as patients were hesitant to come in to the clinic. We have actively pursued alternative options to assist our
patients, such as investing in Telemedicine. Access to low cost capital would allow us to continue to innovatively adapt to our changing
healthcare climate, and keep our costs down by refinancing existing loans.
As community-based, non-profit organizations committed to ensuring access to health care, FQHCs have been on the frontlines of the COVID-
19 pandemic since the beginning. With more than 12,000 care delivery sites nationally, FQHCs provide care for nearly 30 million patients.
Nationally our patients have been disproportionately impacted by the pandemic, as 91% of them are low-income, 23% are uninsured, and 68%
are racial and ethnic minorities, many of whom suffer from multiple chronic health conditions associated with poverty and the effects of racism.
Throughout the pandemic, FQHCs have provided a range of critical front-line care and a growing proportion of testing, particularly in the low-
income, minority communities they serve. At the same time, FQHCs have experienced a significant decline in revenue, due to the need to
curtail many primary and preventive care visits. This combination has placed major financial strain on these non-profit, community-based
providers, forcing them to close sites and lay off staff at the time when their services are most needed.
While FQHCs have received some Federal funding to support COVID relief, for many FQHCs this funding is not enough to reestablish their
pre-COVID level of operations, let alone prepare for the increased demand that will result as millions of newly-unemployed and uninsured
individuals turn to them for care. To date, the Provider Relief Fund has offered most FQHCs only 2% of their net patient revenues; also,
FQHCs with over 500 staff - which in total care for about 9 million patients - are ineligible for Paycheck Protection Loans because of their size.
Recommendation to expand eligibility criteria to allow majority of FQHCs to qualify:
Because of these financial needs, AccessHealth was relieved to learn that the Federal Reserve would soon start offering Main Street Loans to
non-profits. However, after reviewing the proposed Terms Sheet and consulting with experts , we have concluded that almost no FQHCs would
qualify under the proposed eligibility criteria.
This conclusion is based on an analysis conducted by Capital Link, a non-profit organization that receives funding from the Federal Department
of Health and Human Services to assist FQHCs with accessing capital. Capital Link determined that under the proposed lending parameters:
Prior to the pandemic, only 13% of health centers would have met the combined criteria. This includes less than one in five of the FQHCs with
over 500 staff, who are currently ineligible for the Paycheck Protection Program.
Because of the significant cash declines experienced by FQHCs as a result of COVID-19, at present, far fewer than 13% would be able to
meet the DCOH and Cash/Debt ratio at loan origination.
The most problematic financial parameters for FQHCs are:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 5%
Days cash on hand at loan origination equal to or greater than 90 days
Staff Group - Main Fort Bend Ratio of unrestricted cash and investments to outstanding debt (including Main Street debt and CMS Accelerated and Advance Payments) at
Street Lending Family Health origination is 65% or greater
Program - Nonprofit Center, Inc.
Organization PIO (Email 6/22/2020 hlaas@myacce dba In order to provide a meaningful program for which approximately 60% of FQHCs would qualify, we request that the Federal Reserve adjust
Facilities from Web) 12:00:00 AM Laas Harvey sshealth.org AccessHealth the following lending parameters for FQHCs loans as follows:
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
EBIDA to unrestricted 2019 operating revenue greater than or equal to 3%
Days cash on hand at loan origination equal to or greater than 30 days
Eliminate the unrestricted cash to debt ratio requirement
Lower the minimum employee requirement to 20.
In addition, we ask that the Federal Reserve clarify the eligibility requirement that reads: "has not received specific support pursuant to
the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)." As you know, Section 4003 of Title IV
authorizes the Federal government to make loans to States and municipalities for COVID-19 relief. It is possible that a state or municipality
could receive a loan under Section 4003, and use part of it to support FQHCs or other safety net providers. To make clear that FQHCs or other
providers who receive this type of support from their state are still eligible for Main Street Loans, we recommend that the term "specific
support" be revised to read "direct support."
Request for FQHCs to work directly with CDFIs to access Main Street Loans
Finally, it is important to note that Community Development Financial Institutions (CDFIs) have historically played a major role in providing
financing to FQHCs for decades. As such, they understand the FQHC model and are best positioned to underwrite loans to health centers. A
coalition of 25 CDFIs who are members of the Lenders Coalition for Community Health Centers have collectively provided more than $2.1
billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1%.
Unfortunately, very few CDFIs would qualify as eligible lenders under the program as it is currently construed. To enable FQHCs to work
directly with lenders who best understand their model and needs, we recommend that the Federal Reserve structure the nonprofit portion of
the Main Street Loan Program to:
Allow CDFIs to participate as lenders in the program; and
Allow CDFIs to borrow from the Federal Reserve under the same terms as banks, which would enable CDFIs to offer interest rates to FQHCs
at LIBOR +3%
We are providing these comments on short notice to accommodate the Federal Reserve's request. We would be happy to provide more
detailed comments and/or provide additional information to assist the Federal Reserve in developing a program that will be responsive to the
current needs of Federally Qualified Health Centers.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
The Local Initiatives Support Corporation (LISC) is pleased to offer comments in response to the Federal Reserve's proposal to expand
its Main Street Lending Facility to provide access to credit to nonprofit organizations.
We applaud the Federal Reserve's efforts to provide support for nonprofit organizations. Not only do nonprofits represent a large segment
of the U.S. economy - the 1.57 million nonprofits throughout the U.S. employ 10% of the country's workforce -- but they are the
organizations that are serving the most vulnerable communities and populations in the wake of COVID-19. The strength of the nonprofit sector
will dictate the pace of our nation's recovery. Support for their operations is critical.
BACKGROUND ON LISC
LISC is a nonprofit housing and community development organization and certified Community Development Financial Institution (CDFI) with
offices in 35 cities throughout the country, and a rural network encompassing 90 partners serving 44 different states. LISC's work
supports a wide range of activities, including affordable housing, economic development, building family wealth and incomes, education,
community safety, and community health. In 2019 alone, LISC raised and deployed approximately $1.5 billion of capital into distressed urban
and rural communities, including: grants and technical assistance to support non-profits; loans and investments to non-profit owners and
operators of affordable housing; and loans and investments to support non-profit community facilities such as charter schools, health care
centers, childcare centers, workforce facilities, and community centers.
COMMENTS
The comments that follow respond to, and are structured in general accordance with, the "Nonprofit Organization New Loan
Facility" term sheet. We offer these comments from the perspective of a large nonprofit that relies upon bank financing to support our
operations, as well as from the perspective of a lender whose primary customers are nonprofit organizations.
Eligible Lenders
The loan facility should be made available to certified CDFI loan funds. The term sheet limits participation in the loan facility to insured
depository institutions. As the Fed recently did with its PPP loan facility, this facility should be made available to certified CDFI loan funds.
There are over 1,100 certified CDFIs throughout the country, including close to 600 nonprofit loan funds - most of which experience incidences
of loan losses and delinquencies comparable to or better than banks. These entities can serve markets and offer products that are often too
risky for traditional banks. CDFIs also have significant experience financing nonprofit borrowers, particularly the smaller nonprofits working in
distressed neighborhoods and which often have the most difficulty attracting bank capital. The Federal Reserve should be looking for more
ways to partner with CDFIs to serve the underserved markets, rather than potentially displacing them from the markets they know and
understand the most.
Eligible Borrowers
The borrowers should not be limited to 501(c)(3)s and 501(c)(19)s. Many mission-driven nonprofits are established as 501(c)(4)s or 501(c)(6)s,
for example. The term sheet indicates that the Federal Reserve may allow other nonprofits to participate, but it's not clear what standards
would be applied here. The assumption should be that all 501(c)s are eligible except those that the Federal Reserve excludes, and such
exclusions should be clearly articulated.
Nonprofits with fewer than 50 employees should be permitted to receive loans. It is not clear why it is necessary for the Federal Reserve to
require a minimum employment level, but in any instance, 50 employees seems excessive. According to the Independent Sector, there are
1,570,000 501 (c)s that collectively employ 11.4 million workers - meaning that the average nonprofit employs just over 7 workers. Limiting
participation to nonprofits that employ at least 50 workers will exclude the vast majority of nonprofits.
Revenues from donations. The requirement that no more than 30% of a nonprofit's revenues may come from donations strikes us as
arbitrary and unnecessary, and may disqualify many nonprofits that otherwise would be very good candidates for loans from this facility, in
Staff Group - Main
Street Lending Local Initiatives accordance with the other stated underwriting criterion. Furthermore, to the extent the Federal Reserve keeps such a requirement in place, it
Program - Nonprofit Support may need to further define "donations" to ensure that pass-through grants are not counted among donations. The Federal Reserve
Organization PIO (Email 6/22/2020 mjosephs@lisc. Corporation should also consider looking at a three year average rather than a single year (2019), as currently proposed.
Facilities from Web) 12:00:00 AM Josephs Matt org (LISC)
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
EBIDA (Earnings before interest, depreciation and amortization) is not a metric typically used to underwrite nonprofits. It is not clear why this is
a consideration here, when there are other metrics that measure financial strength (e.g., total debt to net assets; total liabilities to net assets)
that are more typically used to underwrite nonprofits, are more easily understood by lenders and non-profit borrowers, and are much more
straightforward to calculate than EBIDA.
Loan Terms
These loan terms are not very favorable for CDFI borrowers. CDFIs rely on bank capital to support their lending operations. Banks are
currently providing five year, interest only loans to CDFIs at a rate of 3%, which is not that dissimilar to the loan terms of this facility. If the intent
of this loan facility is to encourage more favorable lending to nonprofits, and the Federal Reserve does not allow CDFIs to participate as
lenders in this facility, then it should consider creating a lower rate product (e.g., 1 percent or less) for borrowers that are nonprofit CDFIs;
perhaps with a requirement that these CDFIs on-lend to other non-profits that cannot otherwise access the loan facility (e.g., because they
have fewer than 50 employees).
The minimum loan size of $250,000 should be lowered if the Federal Reserve determines to allow non-profits with fewer than 50 employees to
access this facility.
Use of Proceeds should be defined to clarify if there are any restrictions on financing. It is not clear if the funds should be used for working
capital or can be used for project finance.
Required Borrower Certifications and Covenants
Prepayment of other debt. It would appear as though one condition of accepting a loan from this facility is that the borrower has to agree not to
prepay any of its other debts as long as the facility's loan is outstanding. It is not clear why the Federal Reserve would need to limit this
activity, since presumably a borrower choosing to repay debt early has determined that this will improve cash flow and allow the nonprofit to
provide more services.
Retaining Employees
Reasonable efforts. The Federal Reserve will likely need to provide additional guidance with respect to what is needed to demonstrate that a
borrower has made "reasonable efforts" to maintain its payroll and retain its employees throughout the life of the loan; as well as
the consequences should it fail to do so.
Fees
The borrower will likely pay a relatively large origination fee. It is notable that the lender fee to the SPV of 100 basis points may (and therefore
likely will) be passed along to the borrower. This is on top of a 100 basis point origination fee the borrower is already paying. We would
recommend that the Federal Reserve reduce the lender fee to the SPV by at least 50 basis points.
Facility Termination
The termination date needs to be extended. The facility is currently set to expire on September 30th, 2020. This does not strike us as a
reasonable amount of time to line up non-profit borrowers and close transactions, particularly to the extent the Federal Reserve requires
additional time to review comments and made amendments to the term sheet. Furthermore, we may be looking at a fairly long economic
recovery period. We would therefore recommend that the Federal Reserve keep this facility open until at least December 31,2020.
Thank you for consideration of our comments.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
New Jersey Primary Care Association's Comments on the Terms of the Main Street Loans
June 22, 2020
Thank you for this opportunity to provide comments on the terms of the Main Street Loans. I am writing on behalf for the New Jersey Primary
Care Association (NJPCA), a non-profit organization that represents the Federally Qualified Health Centers (FQHCs) in New Jersey. Our
FQHCs are community-based, non-profit organizations that provide high quality affordable and accessible health care for all individuals,
regardless of their ability to pay. As explained below, we appreciate the Federal Reserve's intention to expand Main Street Loans to non
profit organizations; however, after analyzing the draft Term Sheet, it is apparent that almost no FQHCs would qualify for these loans under the
current eligibility requirements. Therefore, we are requesting that:
the loan terms be revised to enable the majority of FQHCs to qualify, and
FQHCs be permitted to work with Community Development Financial Institutions (CDFIs) to access Main Street loans, as CDFIs understand
the unique FQHC model and collectively have provided more than $2.1 billion in loans to FQHCs, with a default rate of less than 1/10th of 1%.
New Jersey's Federally Qualified Health Centers and the COVID-19 Pandemic
As community-based, non-profit organizations committed to ensuring access to health care, NJ FQHCs have been at the forefront of the
COVID-19 pandemic since the beginning. New Jersey is one of the hardest hit states in the country with COVID-19 cases and deaths second
to only New York. Consequently, our patients have been disproportionately impacted by the pandemic, as 95% of them are low-income, 28%
are uninsured, and 77% are racial and ethnic minorities, many of whom suffer from multiple chronic health conditions associated with poverty
and the effects of racism.
With more than 132 care delivery sites statewide, NJ FQHCs provide care for over 580,000 patients with 2.1 million visits annually. Despite the
severity and scope of this pandemic, New Jersey FQHCs have continued to provide a range of critical front-line care and testing, particularly in
the low-income, minority communities in urban hotspots, and hard to reach rural areas and populations.
However, as the pandemic ravaged the state, FQHCs had to suspend certain services, consolidate sites, and adopt telemedicine to ensure
patient and provider safety. These actions have been necessary but have drastically impacted patient volume with a concomitant decrease in
health center revenue. Our FQHCs were already under tremendous financial strain before COVID-19, but this new financial reality poses an
existential threat on these non-profit, community-based providers, forcing them to close sites and/or lay off staff at the time when their services
are most needed.
While FQHCs have received some Federal funding to support COVID relief, for many FQHCs, this funding is not enough to reestablish their
pre-COVID level of operations, let alone prepare for the increased demand that will result as millions of newly-unemployed and uninsured
individuals turn to them for care. To date, the Provider Relief Fund has offered most FQHCs only 2% of their net patient revenues; also,
FQHCs with over 500 staff - are ineligible for Paycheck Protection Loans because of their size.
Recommendation to expand eligibility criteria to allow majority of FQHCs to qualify:
Against the backdrop of this financial calamity, NJPCA was relieved to learn that the Federal Reserve would soon start offering Main Street
Loans to non-profits. However, after reviewing the proposed Terms Sheet and consulting with experts, we have concluded that almost none of
the FQHCs would qualify under the proposed eligibility criteria.
This conclusion is based on an analysis conducted by Capital Link, a non-profit organization that receives funding from the US Department of
Health and Human Services to assist FQHCs with accessing capital. Capital Link determined that under the proposed lending parameters:
Prior to the pandemic, only 13% of health centers would have met the combined criteria. This includes less than one in five of the FQHCs with
over 500 staff, who are currently ineligible for the Paycheck Protection Program.
Because of the significant cash declines experienced by FQHCs as a result of COVID-19, at present, far fewer than 13% would be able to
Staff Group - Main
Street Lending meet the DCOH and Cash/Debt ratio at loan origination.
Program - Nonprofit New Jersey
Organization PIO (Email 6/22/2020 shaq@njpca.or Primary Care The most problematic financial parameters for FQHCs are:
Facilities from Web) 12:00:00 AM Haq Selina 9 Association
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
EBIDA to unrestricted 2019 operating revenue greater than or equal to 5%
Days cash on hand at loan origination equal to or greater than 90 days
Ratio of unrestricted cash and investments to outstanding debt (including Main Street debt and CMS Accelerated and Advance Payments) at
origination is 65% or greater
In order to provide a meaningful program for which approximately 60% of FQHCs would qualify, we request that the Federal Reserve adjust
the following lending parameters for FQHCs loans as follows:
EBIDA to unrestricted 2019 operating revenue greater than or equal to 3%
Days cash on hand at loan origination equal to or greater than 30 days
Eliminate the unrestricted cash to debt ratio requirement
Lower the minimum employee requirement to 20.
In addition, we ask that the Federal Reserve clarify the eligibility requirement that reads: "has not received specific support pursuant to
the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)." As you know, Section 4003 of Title IV
authorizes the Federal government to make loans to States and municipalities for COVID-19 relief. It is possible that a state or municipality
could receive a loan under Section 4003, and use part of it to support FQHCs or other safety net providers. To make clear that FQHCs or other
providers who receive this type of support from their state are still eligible for Main Street Loans, we recommend that the term "specific
support" be revised to read "direct support."
Request for FQHCs to work directly with CDFIs to access Main Street Loans
Finally, it is important to note that Community Development Financial Institutions (CDFIs) have historically played a major role in providing
financing to FQHCs for decades. As such, they understand the FQHC model and are best positioned to underwrite loans to health centers. A
coalition of 25 CDFIs who are members of the Lenders Coalition for Community Health Centers have collectively provided more than $2.1
billion in loans to FQHCs, with a default rate of less than 1/1 Oth of 1.0%.
Unfortunately, very few CDFIs would qualify as eligible lenders under the program as it is currently construed. To enable FQHCs to work
directly with lenders who best understand their model and needs, we recommend that the Federal Reserve structure the nonprofit portion of
the Main Street Loan Program to:
Allow CDFIs to participate as lenders in the program; and
Allow CDFIs to borrow from the Federal Reserve under the same terms as banks, which would enable CDFIs to offer interest rates to FQHCs
at LIBOR +3%
We are providing these comments on short notice to accommodate the Federal Reserve's request. We would be happy to provide more
detailed comments and/or provide additional information to assist the Federal Reserve in developing a program that will be responsive to the
current needs of Federally Qualified Health Centers.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Comments of YWCA USA regarding the proposed Mainstreet Lending Program for Nonprofit organizations - NONLF and NOELF, Submitted to
the Federal Reserved Board of Governors
June 22, 2020
YWCA USA appreciates the opportunity to submit the following comments regarding the Federal Reserve's proposed Nonprofit
Organization Loan programs - the Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Extended Loan Facility
(NOELF).
Founded more than 160 years ago, YWCA is one of the oldest and largest women's organizations in the United States and is dedicated
to eliminating racism, empowering women and promoting peace, justice, freedom and dignity for all. Today, we serve over 2 million women,
girls, and their families through a network of more than 200 local YWCA associations in over 1,300 communities across 46 states and the
District of Columbia. We provide programming and advocacy to generate institutional change in the areas of racial justice and civil rights,
empowerment and economic advancement of women and girls, and health and safety of women and girls.
In this critical time, nonprofits like YWCA have stepped up to meet the unprecedented level of need in our country due to the COVID-19
pandemic. Even though we face many of the same economic challenges as other industries, YWCA and other nonprofits are not shutting
down. Rather, we are straining to meet increasing demands in our communities on the frontlines, providing shelter and services for survivors of
domestic and sexual violence, child care for first responders and other essential workers, housing and job training for low income women, and
countless other services that meet local needs and keep our communities connected. We are playing an integral role in community response to
the COVID-19 crisis, and we will continue to be integral to our nation's recovery.
With these factors in mind, YWCA respectfully requests the Federal Reserve to address the concerns and proposed changes outlined below,
which pose significant barriers to YWCAs' ability to access financial relief through the Mainstreet Lending Program.
1. Limitation of 50-Employee Minimum Should Be Removed
The term sheet for the proposed nonprofit loan facility imposes a size minimum that is not imposed in the Main Street New, Priority, or
Expanded Loan Facilities for for-profit businesses. There is no explanation why the Federal Reserve is proposing that nonprofits with fewer
than 50 employees should not be eligible for Main Street loans for which their small business counterparts of equal size could secure lending
support. YWCA USA and many of the local YWCAs across our national network that are on the frontlines of this pandemic employ fewer than
50 employees. Even as we face immediate and growing financial needs, YWCAs will be arbitrarily excluded from this important loan program.
Recommendation: The 50-employee floor should be removed.
2. Minimum loan amount of $250,000 is too high
Across the nonprofit sector, 66.3 percent of nonprofit organizations have annual budgets of less than $1 million. The proposed minimum loan
amount represents a quarter or more of their annual budget. This amount is too high and many nonprofits will not be able to meet this loan
threshold.
Recommendation: Decrease the minimum loan amount to $100,000.
3. "Reasonable Efforts" Regarding Employee Retention Require Further Clarification
The description of "Retaining Employees" in the draft term sheet requires refinement if the Federal Reserve expects nonprofits to
take advantage of this facility. We endorse the analysis of the National Council of Nonprofits on the issue of employee retention, and
recommend the following:
Staff Group - Main
Street Lending Recommendation: "Reasonable efforts" should be interpreted in the totality of the circumstances, taking into consideration not only
Program - Nonprofit the general economic environment in the community or communities in with the borrower operates, but also factors such as workforce,
Organization PIO (Email 6/22/2020 cbeane@ywca. fundraising ability, revenue-generating activities, and overall demand for the services and programs the organization provides. One option
Facilities from Web) 12:00:00 AM Beane Catherine org YWCA USA would be to add the qualifier "mission-based" before "reasonable efforts."
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Recommendation: The terms "maintain its payroll" and "retain its employees" are vague and need further refinement.
We ask the Federal Reserve to make clear that nonprofits participating in the Main Street loan program generally should endeavor to pay staff
at the same or increased income levels and should act in good faith to keep staffing levels (measured on the basis of full-time equivalents) at
the same or increased levels, both for the duration of the loan. It is also important that the loan documents expressly state that the employee
retention provision begins on the date that loan funding is received by the borrower rather than at an earlier date.
Recommendation: We ask that the Federal Reserve adopt safe harbors of other loan programs and state clearly that nonprofit borrowers will
not be penalized under the employee retention provision for the decision of employees to decline offers of rehire, or for those who are fired for
cause, voluntarily resign, or voluntarily request a reduced schedule during the time that the loan is outstanding.
4. Additional Recommendations and Requests for Clarification
YWCA USA respectfully requests the Federal Reserve clarify the following issues in its final expansion notice:
Endowment: What resources should be included in endowment calculations? Does it include restricted endowments? Does it extend to include
cash on hand?
Collateral: Flexibility on collateral is requested. The loan should be able to be approved with no more than 50% Loan to Value (LTV) if
collateral is needed.
Other Debts: The proposal requires that borrowers, "refrain from repaying the principal balance of, or paying any interest on, any debt
until the Eligible Loan is repaid in full, unless the debt or interest payment is mandatory and due." We request that this exclude lines of
credit and other debt that are assumed to provide financial liquidity related to the impact of COVID-19.
Thank you for your consideration of these comments and recommendations. Please do not hesitate to reach out if we can provide additional
information or insights as you undertake this review process.
Sincerely,
Alejandra Y. Castillo
CEO, YWCA USA
After reading the proposed eligibility requirements for this loan program, I am at a loss as to the requirement of 50 or more employees as part
of the program's definition of 501 c(3). This not a requirement for qualification as a small 501 c(3). There should be consistence between
Staff Group - Main theses definitions. Additionally, requiring donations to be less than 30% of revenue would eliminate many Arts and Cultural organizations as
Street Lending Personal Email
they depend heavily on donations for survival. Arts orgs strive for a balance of 'sales' to 'contributions' lest they be at the
Program - Nonprofit Address whim of one or two unpopular shows. Many organizations' sales and contributions consist of multiple vehicles, and reach to 30%
Organization PIO (Email 6/22/2020 Mount Baker donations. It seems irrational to have a program designed to serve non-profits, and then limit the revenue sources.
Facilities from Web) 12:00:00 AM Prela Cecilia Theater
I am writing regarding the current funding situation for ICF individuals in the State of Ohio and mainly on behalf of my brother who has been in
a facility his whole life. Budgets are tight, but he and the other members of the ICF community can not survive or have any quality of life in a
halfway house type setting. He requires constant care, supervision, and management of his needed prescription meds. That funding must
remain in place for these Developmental Disabilities individuals to maintain a safe and full life. Some politicians feel the current funding levels
can not be sustained for this class of american citizens. We as a country must provide for our most vulnerable citizens through no fault of their
Staff Group - Main own have these disabilities to live with. We need the Fed to step up and fill any economic funding gap to ensure these citizens are adequately
Street Lending cared for. On behalf of my brother and his peers, I implore the Fed to do the due diligence and maintain adequate funding for all ICF citizens in
Personal Email
Program - Nonprofit Address the State of Ohio.
Organization PIO (Email 6/22/2020 Thank you for your consideration and action on behalf off all these citizens.
Facilities from Web) 12:00:00 AM Stuhldreher Christopher USAF
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
International Association of Venue Managers
Comment on The Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF) -
Request to Ensure Public Assembly Venues Are Eligible
As the president of the International Association of Venue Managers (IAVM), I appreciate the Federal Reserve's call for public feedback
on a proposal to expand the Main Street Lending Program to provide access to credit for nonprofit organizations. I am writing on behalf of our
professional members of IAVM to ask that the Federal Reserve make not-for-profit publicly created public venues eligible to apply for the New
Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF).
IAVM is a professional organization representing over 7,200 members who are the executives and front-line staff at public assembly venues,
which include arenas, stadiums, performing arts centers, amphitheaters, convention centers, fairgrounds, universities and others. Public
assembly venues have been particularly hard hit by COVID-19. They were the first businesses to close in March and certainly will be the last to
reopen due to proper health safety concerns.
Most of our venues have been forced to furlough, terminate and/or decrease compensation of current staff to maintain basic operating needs,
while others have taken even more drastic measures to ensure the preservation of fund balances that might allow them to survive this
pandemic.
These public venues serve as the bedrock of economic activity in both large and small towns across America. From retail to local restaurants
and hotels, public venues are responsible for generating revenues to independent locally owned businesses that serve live events. Many local
businesses and individual staff work exclusively in presenting live events and they too, have been financially devastated with the lack of events
to serve and support. This economic multiplier effect could be the determining factor between a struggling and a thriving community-based
business district, in a post-pandemic era.
In addition, publicly created quasi-governmental public assembly venues generate significant tax revenues for their communities by attracting
visitors from outside of their immediate geographic area to attend live events.
For-profit venues have been able to qualify for federal COVID-19 relief under programs created by the CARES Act, but the majority of
organizations where IAVM members work have not. Currently, most of the venues described above are not eligible for the Paycheck Protection
Program (PPP) or the Main Street Lending Program, due to their status as not-for-profit quasi-governmental entities. Over 72% of IAVM
professionals work at venues that, although established by a political subdivision of a state or local government, fund their operations primarily
through live generated event revenues, just like privately-operated venues.
In fact, most of these venues are set up as government enterprise fund budgets, a designation which requires public venues to generate their
own revenues to fund venue operations. As a result, these venues receive little to no funding from governments. Because these public
assembly venues are not included in state and local general operating budgets, they will not receive federal COVID-19 relief funds designated
for state and local governments. Unlike venues set up as 501(c)(3)'s, which include most of the performing arts theatres, other type
venues cannot accept charitable contributions. The bottom line: there is nowhere for these venues to turn to help them survive during this
pandemic and be ready to reopen safely for patrons and workers.
It is important to note that these not-for-profit public assembly venues are not designated as tax-exempt organizations under section 501 (c)(3)
or 501 (c)(19) of the Internal Revenue Code (IRC). Because they were set up by their state or local governments, they are not organized under
section 501 of the IRC. They do provide equivalent services as for-profit venues that operate in NAICs Codes 561920 (convention trade show
organizers), 561591 (convention and visitor bureaus) and 711310 (performing arts, sports and similar facilities).
The majority of our member venues are confused and wondering why some venues have received PPP or other federal funds, while there is
no financial relief for them, although they are similar in nature as an economic engine for their communities when they host live events just like
501 (c)(3)'s and for-profit venues.
Staff Group - Main
Street Lending International With this in mind, as you determine eligibility for NONLF and NOELF, I urge the Federal Reserve to include publicly created quasi-
Program - Nonprofit Association of governmental public assembly venues that receive no more than 25% of their operating budgets from state or local governments. While the
Organization PIO (Email 6/22/2020 Brad.Mayne@i Venue majority of public venues do not come close to this level of operating budget funding from their state or local governments, we propose this
Facilities from Web) 12:00:00 AM Mayne Brad avm.org Managers formula in order to ensure that the recipients, in fact, need the federal support to be the economic engine that they were created to become
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
and help their communities recover from the current pandemic.
Best regards,
Brad Mayne
President
International Association of Venue Managers
Event Title 1
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
The Federal Reserve has acted boldly in responding to the economic crisis that has resulted from the coronavirus pandemic. In addition to
supporting macroeconomic stability with traditional monetary policy tools, the Mainstreet Lending Programs represent a particularly decisive
step to more directly ensure liquidity to smaller and medium sized businesses that were not in financial distress before the crisis. These
programs have the potential to be an important bridge through this crisis for many businesses and the workers they employ. They also have
the potential to leave out many businesses, in a manner similar to how the Paycheck Protection Program (PPP) failed to deliver resources in a
timely manner - if at all - to the large majority of businesses owned by people of color.
With shocking speed, this crisis has laid bare the vulnerability of the large majority of entrepreneurs of color and many low wealth workers. It is
clear that the current federal fiscal policy response, and the mainstream banking system, are not meeting the immediate needs of low wealth
households, who are disproportionately of color. A one size fits all approach cannot effectively respond to this challenge in diverse
communities. The channels used for delivering resources to diverse communities have a major impact on the efficacy of the investment.
Solutions must be culturally and linguistically relevant; rooted in the specific cultural and economic realities of the community to be served.
Non-profit institutions that reflect the communities they serve and deliver culturally relevant services are disproportionately important for serving
distinct ethnic/ racial communities and achieving equitable outcomes.
With this perspective in mind, it is important to recognize the differences in the potential purpose and impact between the primary Mainstreet
Lending Programs and those being established for nonprofit organizations. The goal of the primary Mainstreet Lending Programs is to support
employment during this crisis by providing liquidity to smaller and mid-sized businesses that were financially healthy prior to the crisis and have
a viable path to recovery if they have access to a capital bridge. Non-profit organizations like universities, hospitals, and large cultural
institutions are also important employers and having a program that recognizes the differences in the financial model of a large nonprofit
employer is sensible and consistent with the purpose of the rest of the Mainstreet Programs. Other types of non-profits, however, including
Community Development Financial Institutions (CDFIs) and community development corporations, support employment and their local
economies not simply as employers, but through the investments they make in the communities they serve as lenders or affordable housing
developers. The Federal Reserve has the opportunity to ensure much deeper and equitable impact in the economy by purchasing responsibly
structured debt, through a correspondent bank lender, from non-profit community development institutions - particularly investments that are
secured by real estate and/or in which risk is mitigated by government or philanthropic guarantees. The Federal Reserve already recognized
this opportunity to engage non-profits when it opened its Paycheck Protection Program Liquidity Facility to non-depository CDFIs. There is an
urgent need to ensure greater access to liquidity for community development finance to provide a counter cyclical stimulus that directly targets
those communities that have been worst impacted by the crisis. Indeed, the Fed should encourage its correspondent lenders to work with non
profits that deliver capital in communities of color and other population segments and geographies that are experiencing particular harm, as
demonstrated in the Federal Reserve's own data.
NALCAB- The limitation established in the Federal Reserve's initial term sheets with regard to having a nonprofit needing a minimum of 50
Staff Group - Main National employees to be an eligible borrower appears arbitrary, especially when considering that a nonprofits' greatest value in this structure may
Street Lending Association for not be as a direct employer, but rather as a community development investor. Reducing the minimum number of employees to 25 would
Program - Nonprofit Latino practically open the Federal Reserve facility to numerous impactful community development nonprofits that effectively invest sizable amounts
Organization PIO (Email 6/22/2020 npoyo@nalcab. Community of capital into diverse, low wealth communities, and which already have partnerships with correspondent lenders.
Facilities from Web) 12:00:00 AM Poyo Noel org Asset Builders
The non-profit agency I help lead has a 100 year history of helping families in Massachusetts. Last year, we delivered home visiting services to
over 15,000 infants and toddlers. Our skilled staff of 864 professionals made this possible. And yet, because there are more than 500 of us, we
were left without support for sick leave, paycheck protection, and forgivable loans. We are held to different criteria for the employee retention
credit. We are left out of the economic stimulus that is essential for our organization's survival.
The lack of cash flow to our agency and others like ours has led to job loss and has delayed job creation. The longer term impact is that
communities, families, and our service sector will suffer for decades. Across the country, programs like ours are closing, furloughing staff, and
stopping services to children who need our help.
With access to favorable lending terms and with the same stimulus funding that was offered to smaller non-profits, we could start calling back
Staff Group - Main to work our furloughed staff. We could continue to support children and families. We could avoid an erosion of our social service sector.
Street Lending Necessarily, however, the eligibility criteria ratio of, "adjusted 2019 EBIDA to unrestricted 2019 operating revenue, greater than or equal
Program - Nonprofit Thom Child to 5%", excludes nearly every social service nonprofit known to us. This criteria is burdensome, unnecessary, and rewards nonprofit
Organization PIO (Email 6/22/2020 awahab@thom and Family agencies that have chosen to retain a high earnings margin. To support nonprofits and economic recovery, this criteria must be removed.
Facilities from Web) 12:00:00 AM Wahab Aisha child.org Services
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Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
RE: Main Street Lending Program Nonprofit Organization New Loan Facility (NONLF)
To Whom it May Concern:
Thank you for the opportunity to comment on the proposed Main Street Lending Program Nonprofit Organization New Loan Facility (NONLF),
which has been authorized under Section 13(3) of the Federal Reserve Act. This comment is made on behalf of New York Edge, Inc.
Introduction
New York Edge, Inc. (NYE) is a New York State incorporated nonprofit that is the largest provider of afterschool programs in New York City.
The mission of New York Edge is to bridge the opportunity gap for underserved communities, by providing 40,000 children and families with
critical academic, sports, and arts programming at no cost. NYE programs are designed to improve the academic performance, health and
wellness, self-confidence, character and attitudes of the participants, and provide them with the edge they need to succeed.
Like many nonprofits across the nation, the COVID-19 pandemic has had devastating impacts on New York Edge, and the ability of the
organization to deliver critical human service programs to our communities. New York City has implemented significant budget cuts to the
Youth & Community Development sector, and funding for New York Edge summer programs has been completely eliminated. The
organization quickly pivoted to a remote instruction model to continue serving our communities, however without funding to bridge the gap the
future of the organization is at risk.
This comment will outline the need for New York Edge, and similarly situated organizations, to have access to the NONLF program and
concerns regarding the proposed eligibility requirements. Due to the exclusion of large nonprofits from the Paycheck Protection Program, it is
imperative that the NONLF program be accessible to all large nonprofits - and that organizations are not excluded based on arbitrary financial
metrics.
Exclusion of Large Nonprofits from the Paycheck Protection Program
The passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act provided much needed lifeline to many nonprofit
organizations, particularly with respect to the Paycheck Protection Program (PPP). However, many nonprofits that are desperately in need of
assistance have been excluded from PPP eligibility due to size. The decision to limit PPP relief to nonprofit organizations with less than 500
employees has left many organizations like New York Edge at risk.
Without the ability to maintain the New York Edge workforce through PPP funds, New York Edge will be reducing staff hours to a two-day work
week, thereby running the risk of losing many staff permanently. Without an external source to bridge the funding gap, New York Edge runs the
risk of contracting its services significantly.
Exclusion of Nonprofits from the NONLF Based on Financial Metrics
Based on the language of the proposed rule, nonprofits must meet an 11-factor test in order to be eligible for the NONLF loan program. Many
of these factors include financial ratios that are likely to exclude certain nonprofits, even though they may still be in need of access to the
NONLF loan program.
Based on the EBIDA requirement New York Edge would not be eligible for this program as the organization carries an EBIDA that is less than
5%. The EBIDA loan eligibility requirement does not make sense for New York Edge, or other large nonprofits of our size. New York Edge
managed organizational finances to yield a surplus - that surplus is computed by factoring in all revenues and all expenses - and that strategy
was successful. On revenues of $45.7 million our surplus was $673,451; achieving a surplus of 5% would have necessitated an irrational
cutting our service delivery costs by $2.3 million - consequently negatively impacting a significant swath of our students.
Nonprofits should not be penalized for being effective stewards of organizational finances. The financial metrics used to determine eligibility for
Staff Group - Main
Street Lending the NONLF program must be adjusted in order to ensure eligibility for all nonprofits regardless of EBIDA.
Program - Nonprofit
Organization PIO (Email 6/22/2020 mmontanez@n New York Conclusion
Facilities from Web) 12:00:00 AM Montanez Marissa ewyorkede.org Edge, Inc.
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Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
The NONLF program must be available to all large nonprofits, so that organizations may continue to provide the work that is so critical to our
communities. In particular, this program must be available to nonprofits that have been otherwise excluded from any federal relief under the
CARES Act.
The COVID-19 pandemic has devastating impacts on New York City, and New York Edge's work in serving our participants is more
important now than it has ever been. All large nonprofits, including New York Edge, must have access to this critical funding that will allow
nonprofits to continue providing invaluable services to communities across the nation.
Event Title /
Description Ticket Type Received Date Last Name First Name Email Address Affiliation Comment
Comments to the Federal Reserve from ORGANIZATION
Greetings, we are sending this on behalf of the Lincoln Cultural Center Development Center in Lincolnton, North Carolina, a place where
history is appreciate, talent is cultivate and art, both visual and performing is enjoyed. As you can guess, our facility is dark and quite which is
contradictory to our livelihood and purpose. We are grieving the losses, loss of activity and programs and loss of income that provides for our
future.
The Lincoln Cultural Center appreciates the opportunity to submit comment to the Federal Reserve about the Nonprofit Organization Loan
Facilities. This proposal is aimed more at transactional nonprofits such as hospitals and institutions of higher ed than at nonprofits like The
Lincoln Cultural Center and our member organizations that have a larger reliance on donations from the public to support their missions.
Indeed, many nonprofits pride themselves on offering their services at no charge. Recognizing that their business models are different,
even if both types of charities are inherently organized around a public mission, many of the financial requirements included in this proposal
simply are not applicable to organizations that rely on donations. With that in mind, Lincoln Cultural Center respectfully requests the Federal
Reserve to address the concerns and proposed changes outlined below.
Congress Must Act to Ensure Mid-Sized Nonprofits are Eligible for Loan Forgiveness
Congress must ensure that mid-sized nonprofits have access to loan forgiveness. While it is a welcome development to see the Federal
Reserve making its Main Street lending program available to some nonprofits, this assistance still falls short of what is most needed by
nonprofit organizations - a provision that makes these loans forgivable.
In this critical time, nonprofits have stepped up to meet the unprecedented level of need in our country due to the COVID-19 pandemic. Even
though they face many of the same economic challenges as other industries, nonprofits are not shutting down. Rather, they are straining to
meet increasing demands in our communities on the frontlines, caring for the sick, feeding families, and keeping our communities connected.
Furthermore, they will play an integral role as our nation recovers - providing child care, job training, and other core supports.
Charitable nonprofits of all sizes and focus areas are struggling to maintain mission-critical operations despite enormous economic challenges.
Data released by Independent Sector shows that nonprofits with between 500 to 5,000 employees, key to scaling relief efforts across the
nation, have been severely impacted by this health and economic crisis. When asked "What types of additional assistance would be most
helpful to your organization?" organizations overwhelmingly (92% of responses) suggested government support in the form of forgivable
loans. Smaller nonprofits throughout the country have been hit equally hard.
Nonprofit organizations need funding so they can continue to meet the needs of their communities. Many charitable organizations do not have
steady streams of commercial income and have little capacity for loan and interest repayment. Furthermore, nonprofits are the third largest
employment sector and many hope to hire more workers as their organizations recover. America cannot afford to leave out such a vital part of
the economy.
Recommendation: Congress must recognize the vital services nonprofits provide to communities and the economy by including loan
forgiveness, in the next round of COVID-19 relief legislation
The Fed's Proposal to Limit Loans to Mid-Size Nonprofits with Less than 30% of Revenue from Donations Disqualifies Many in Charitable
Sector
The Federal Reserve's criteria that organizations must have revenues from donations that are less than 30% disqualify many charities,
including the Lincoln Cultural Center. Overall, this loan facility seems more applicable to for-profit entities, as well as educational institutions
and nonprofit hospitals, but not most charitable organizations.
Recommendation: Eliminate the requirement that no more than 30 percent of an organization's 2019 revenues come from donations, and
instead make 501(c)(3) organizations that are otherwise meet the employee size are eligible.
The Fed Needs to Make Loan Terms More Favorable to Charitable Organizations
The draft Nonprofit Loan Facility imposes certain liquidity, asset, and reserve requirements that are not required in Main Street New
Loan Facilities available to for-profit businesses.
Lincoln Cultural Snbsp;
PIO (Email 6/22/2020 lincolncultural Development Nonprofit organizations typically provide services with low-profit margins. Indeed, social service organizations report an average aggregate
General Inquiry from Web) 12:00:00 AM DAVIS CATHY @bellsouth.net Center, Inc. margin of 1.5%. According to a recent report by Seachange Capital Partners, the median social services nonprofit has a margin of 1.0%,
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receives 3.6% of its revenue from philanthropy (including investment income), has total financial assets (including endowments and other
assets that are subject to legal restrictions) equal to 1.9 months of expenses, and operating reserves of less than one month of
expenses. Less than 20% of large nonprofits have 6 months or more of operating reserves, a widely accepted standard for
"financial strength" for nonprofits. Social services organizations are the most fragile, with fewer than 10% reaching this
standard.
Snbsp;
The statistics above should not be viewed as an indictment of the efficiencies or management policies of nonprofits. It is important to note that
the vast majority of social service nonprofit funding comes from government grants contracts, recognizing the key role such organizations play
in serving the most vulnerable. Numerous studies confirm that government funding seldom covers the full cost of providing contracted
work, which inhibits nonprofits from accumulating reserves through surpluses. In many instances, government grant/contract work creates
cash-flow challenges since it is paid after the work has been completed and can be subject to significant delays in payment.
Snbsp;
Recommendation: Recognizing the unique nature of nonprofit operations and their importance in continuing to provide vital services as
partners on the front lines of the COVID-19 crisis, we urge the Federal Reserve to eliminate borrower requirements 7 and 8. If this is not
possible, we alternatively ask that the requirements be lessened significantly to reflect the economic realities of nonprofit operations, for
example by requiring only 30 days cash on hand, and bringing the loan origination ratio of 40-50% (down from 65% as proposed).
We are also concerned that certain eligible loan features are too onerous for nonprofit organizations and are less favorable than those offered
in other government programs. Specifically, the interest rate of LIBOR plus 300 basis points is significantly higher than that offered for
Paycheck Protection Program ("PPP") Loans (1.0%) and that for Economic Injury Disaster Loans (2.75%). In addition, the
imposition of loan origination and service fees adds to the cost under the Nonprofit Facility. Finally, the notion that nonprofits would be faced
with a 70% balloon payment at the end of the fifth year of the loan would be off-putting for many nonprofits. Nonprofits with
existing loans with balloon payments are usually provided an opportunity to renegotiate such loans at prevailing market rates.
Snbsp;
Recommendation: We urge that the loan terms including interest rate and balloon payments be revisited and recommend the lowest
permissible rate such as the 0.5% rate initially proposed for PPP loans. In addition, we urge some flexibility in the balloon payment requirement
to afford the opportunity for renegotiation. lf the 5-year amortization were extended to 7 years, this could lessen the balloon payment.
We request that the borrower have access to engage with derivatives (change to a fixed rate) without the minimum swap requirements.
The Ratio of Adjusted 2019 Earnings before "EBIDA" Should Be Revised
In the "Draft for Public Consultation," for both the Nonprofit Organization New Loan Facility and the Nonprofit Organization
Expanded Loan Facility, one of the eligibility criteria for borrowers is that they must have "a ratio of adjusted 2019 earnings before
interest, depreciation, and amortization ("EBIDA") to unrestricted 2019 operating revenue, greater than or equal to 5%." (#6)
In the context of nonprofit operations, this threshold is too high and would make many, if not most, nonprofits ineligible based on these criteria
alone, which seems written more in the context of for-profit businesses as opposed to nonprofit organizations.
It may certainly be prudent and necessary to have a positive ratio of adjusted earnings; however, nonprofits generally run on a small margin,
both out of necessity and also so as to not leave excess surpluses that could be used for fulfilling their missions. Moreover, at times a nonprofit
may have a planned and manageable deficit as part of a strategic plan-a negative ratio at one isolated point is not always an indication of
instability.
Furthermore, the footnotes for criteria #6 clarify that "The Eligible Lender should calculate operating revenue as unrestricted operating
revenue, excluding funds committed to be spent on capital." Many nonprofits have "restricted revenue" through grants and
contracts built into their operating budgets. Excluding this revenue would compound the problem of meeting the 5% ratio. Although it would be
sensible to exclude contributions raised for a "capital campaign," excluding other capital funds included in an annual budget for
maintenance and planned upgrades would further decrease the required ratio.
Recommendation: The 5% requirement should be reduced to zero, if not eliminated. In addition, a statement of explanation of a deficit should
be allowed so that a negative ratio does not mean automatic ineligibility for a nonprofit borrower. Finally, further clarification on the calculation
methodology -in the context of nonprofit operating budgets- is needed in regard to both restricted funding from grants in annual operating
budgets, as well as capital funds for improvements that are part of an annual operating budget. This clarification would allow noted revenues to
remain in calculation to ease the restriction and not further restrict eligibility.
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