Nonprofits Ineligible for Main Street Lending

When the Federal Reserve’s Main Street Lending Program was first announced last month, references to nonprofit borrowers were conspicuously missing. New guidance released by the Federal Reserve on April 30 confirmed that nonprofits are currently ineligible to apply for the program, which will facilitate $600 billion of lending to small and medium-sized businesses.

In its new Q&A, the Federal Reserve explained that the “key underwriting metric” – EBITDA (earnings before interest, taxes depreciation and amortization) – is the reason for this exclusion. Nonprofits don’t typically calculate EBITDA, which will be used to determine the maximum loan size.

The Federal Reserve and Treasury Department will be the evaluating eligibility criteria to determine the feasibility of a separate approach for nonprofit organizations. In the meantime, nonprofits should explore all other sources of relief and business continuity strategies, including:

  • Foundation Grants – Foundations across the country are activating funds and other resources to help nonprofits and the communities they serve. Our Grant Compliance specialists have identified many of the options available in the tri-state area.
  • FEMA Assistance – Private nonprofits that have sustained COVID-19 losses may be eligible to apply for Federal Emergency Management Agency assistance. Learn more about the eligibility requirements from our emergency loan consultants.
  • Paycheck Protection Program – This popular loan program, which offers low-interest, long-term and potentially forgivable loans under the CARES Act, was replenished with a second round of funding for small businesses and nonprofits.
  • Cash Flow Forecasting – Predicting the cash that will flow in and out of your nonprofit in the coming weeks and months will help you successfully managing your expenses, workforce and funding requirements. Cash flow strategies are an essential component of any disaster recovery plan.
  • Tax incentives – Speak with your tax advisor to take advantage of all available tax relief, including the employee retention credit, payroll tax deferrals, employer tax credit for qualified disaster relief payments and federal and state tax payment deadline extensions.

Grassi’s Not-for-Profit practice is here for you – now more than ever – to help your organization adapt to change and uncertainty and plan for a brighter tomorrow. For more information on how can support you on the road to recovery, please contact David M. Rottkamp, CPA, Not-for-Profit Practice Leader at

David M. Rottkamp David M. Rottkamp, CPA, is an Audit Partner and Nonprofit Practice Leader, at Grassi. David has over 36 years of experience providing audit and advisory services to the not-for-profit and health care industries. David focuses on organizations serving individuals with special needs, religious organizations, educational institutions, membership associations, social service providers, healthcare providers, foundations, and the arts and culture world. David’s technical knowledge allows... Read full bio

Categories: Advisory