Congress tasked the Treasury Secretary with creating a loan program for employers with 500 to 10,000 employees to fill the gap between the Paycheck Protection Program for smaller employers and the industry stabilization loans for big business.
On April 16, PNY submitted comments to the Federal Reserve in support of creating of a loan program for nonprofits with 500 to 10,000 employees.
Philanthropy New York is a 501c3 organization with 287 members – all grant making institutions primarily located in NYC. Our membership is concerned with the sustainability of our nation’s nonprofits. Congress tasked the Treasury Secretary with creating a loan program for employers with 500 to 10,000 employees to fill the gap between the Paycheck Protection Program for smaller employers and the industry stabilization loans for big business. Treasury has announced no such loan program to date. The Federal Reserve and Treasury Department announced two Main Street Lending Facilities. Loans would be available for businesses with up to 10,000 employees. Loan terms are less favorable than in the CARES Act. The Facilities fail to mention “nonprofits,” which employ the nation’s third largest workforce and are on the frontlines of our nation’s coronavirus response. To comply with §4003(c)(3)(D), we suggest that a loan program for nonprofits should:
-Include an interest rate of 0.50% (50 basis points) for 501(c)(3) charitable nonprofits at a 5 year amortization
-Provide priority to 501(c)(3) charitable nonprofits responding to COVID-19 relief efforts and require lenders to make a proportionate number and value of loans to nonprofits to prevent the crowding out being experienced in the Paycheck Protection Program
-Set a date certain for when employee retention provisions should begin
-Ensure payments shall not be due until two years after a direct loan is made
Thank you.