This document was issued on December 29, 2020, and contains the final set of nonprofit facility FAQs published when the Program was accepting new loans. Please see the Post-Termination FAQs for questions that continue to be applicable to Main Street borrowers and lenders.

Main Street for Nonprofit Organizations
Part of the Main Street Lending Program
Frequently Asked Questions

This document is intended to address frequently asked questions (FAQs) about the Main Street Lending Program (Main Street or Program) facilities for nonprofit organizations, including the Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF). A separate document, available here, is intended to address FAQs about Program facilities applicable to for-profit businesses: the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF). The Federal Reserve will periodically update these FAQs. Please check the website of the Federal Reserve Bank of Boston (FRB Boston) for new FAQs or revisions to previously issued FAQs.

The Main Street Lending Program will terminate on January 8, 2021. Please refer to FAQ L.13 for more information on the timeline for processing loans before termination.

CONTENTS

A. Purpose and Design ... 9
A.1. Why is the Federal Reserve expanding the Program to include nonprofit organizations? ... 9
A.2. How is the Department of the Treasury supporting the Program? ... 9
A.3. Are loans that are originated or upsized in connection with the Program forgivable? ... 10
A.4. What are the differences between the NONLF and the NOELF? ... 10
A.5. How long will the Program be in effect? ... 10
A.6. Is there a limit to the size of the Program? ... 11
A.7. What are the differences between the Program and the Paycheck Protection Program and Primary Market Corporate Credit Facility? ... 11
A.8. What provisions of the CARES Act apply to the Program? ... 11
A.9. What are the conflicts of interest provisions of the CARES Act? ... 12
A.10. Can the principal amount of loans extended under Main Street be reduced? ... 13
B. NONLF Loans ... 13
B.1. How does the NONLF work? ... 13
B.2. What are the terms of NONLF Loans? ... 13
B.3. What is the effect of the requirement that NONLF Loans not be "contractually subordinated in terms of priority" to other loans or debt instruments? ... 13
B.4. Can an Eligible Lender make an NONLF Loan to a new customer? ... 14
C. [Reserved.] ... 14
D. NOELF Upsized Tranches ... 14
D.1. How does the NOELF work? ... 14
D.2. What are the terms of NOELF Upsized Tranches? ... 15
D.3. Under the NOELF, can an Eligible Lender sell a participation in an upsized tranche of a loan that was originated as part of a multi-lender facility? ... 15
D.4. Does the Eligible Lender for the NOELF Upsized Tranche need to be the same Eligible Lender that originated the underlying loan? ... 16
D.5. If an existing multi-lender facility loan does not have an "opening" or "accordion" clause, can it still be eligible for upsizing under the NOELF? ... 16
D.6. What requirements exist for the loan underlying an NOELF Upsized Tranche? ... 16
D.7. Why is the minimum loan size for an NOELF Upsized Tranche $10 million, rather than $100,000 in the NONLF? ... 17
D.8. Can the Eligible Lender that sells a participation to the Main Street SPV share its 5% retention of the NOELF Upsized Tranche with other members of a multi-lender facility? ... 17
D.9. What if no EBIDA methodology or proxy for endowment income methodology was used when originating or amending the loan underlying an NOELF Upsized Tranche? ... 17
D.10. How can the "pass" criterion be satisfied if the loan underlying an upsized tranche was originated or purchased by an Eligible Lender after December 31, 2019? ... 18
D.11. What does it mean for an NOELF Upsized Tranche to be "senior to or pari passu with, in terms of priority and security, the Eligible Borrower's other loans or debt instruments, other than mortgage debt"? ... 18
D.12. Are Eligible Lenders required to hold all of their positions in the credit facility underlying an NOELF Upsized Tranche for the life of the loan? ... 20
E. Borrower Eligibility ... 20
E.1. Which entities are eligible to borrow under the Program? ... 20
E.2. How is "Nonprofit Organization" defined? ... 23
E.3. How should a Nonprofit Organization count employees for purposes of determining eligibility under the Program? ... 24
E.4. How should a Nonprofit Organization calculate 2019 revenues for purposes of determining eligibility under the Program? ... 25
E.5. Which entities are a Nonprofit Organization's affiliates for purposes of the employee and revenue eligibility criteria? ... 25
E.6. [Reserved.] ... 26
E.7. [Reserved.] ... 26
E.8. What does "significant operations in the United States" mean? ... 26
E.9. Can a Nonprofit Organization that is a subsidiary of a foreign company qualify as an Eligible Borrower? ... 26
E.10. Can an otherwise eligible Nonprofit Organization borrow if its affiliate has already borrowed under a Main Street Facility, the MLF, or the PMCCF? ... 26
E.11. [Reserved.] ... 27
E.12. [Reserved.] ... 27
E.13. Are Eligible Lenders required to adopt any special compliance procedures to verify that a Borrower is not an "Ineligible Business" under 13 CFR 120.110(o)? ... 27
E.14. [Reserved.] ... 28
E.15. How are "total expenses" and "average daily expenses" calculated for purposes of determining Nonprofit Organization eligibility? ... 28
E.16. How is "non-donation revenues" calculated for purposes of determining whether a Nonprofit Organization has total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019? ... 28
E.17. Can a public hospital or a public college or university that is not recognized as tax-exempt under section 501(c)(3) of the IRC qualify as a Nonprofit Organization? ... 30
E.18. Is a hospital owned by governmental entities considered an Ineligible Business? ... 30
E.19. How should a Nonprofit Organization calculate its non-donation revenues and expenses for the period from 2017 through 2019 if it does not have audited financial statements or annual receipts for fiscal year 2019 reported to the IRS? ... 30
F. Application Process ... 31
F.1. How can I apply for a Program loan? ... 31
F.2. Is a Nonprofit Organization eligible to borrow if it receives a PPP loan or Economic Injury Disaster loan (EIDL)? ... 31
F.3. Do Eligible Borrowers qualify automatically for a loan under the Program? ... 31
F.4. Can an Eligible Borrower apply for a Main Street loan through multiple Eligible Lenders? ... 31
G. Terms and Conditions ... 32
G.1. How will adjusted 2019 EBIDA be calculated? ... 32
G.2. How will "existing outstanding and undrawn available debt" be calculated? ... 32
G.3. Why are Program loans based on LIBOR rather than SOFR? ... 32
G.4. When do I need to start paying interest and principal on my loan? ... 33
G.5. How will principal be amortized after the second year? ... 33
G.6. Is collateral required for Main Street loans? ... 33
G.7. Are there fees associated with Main Street loans? ... 33
G.8. What constitutes "reasonable efforts" to maintain payroll and retain employees? ... 35
G.9. Can an Eligible Borrower receive more than one Main Street loan? ... 35
G.10. Can an Eligible Borrower receive a loan if its maximum loan size under a facility's term sheet test is below the minimum loan size for the same facility? ... 35
G.11. How can an Eligible Borrower determine if its existing loans had an internal risk rating equivalent to a "pass" in the FFIEC's supervisory rating system on December 31, 2019? ... 35
G.12. Can a Lender charge a Borrower additional fees above the Main Street origination fee and/or an interest rate above LIBOR + 300 basis points? ... 36
G.13. What methodology should be used to adjust EBIDA if an Eligible Lender has used a range of methods in the past with respect to a single Eligible Borrower or similarly situated borrowers? ... 36
G.14. For purposes of adjusting EBIDA, how does an Eligible Lender identify "similarly situated borrowers"? ... 37
G.15. Why is the Federal Reserve allowing adjustments to EBIDA for purposes of Main Street when it has noted supervisory concerns with these adjustments in the past? Is there a limit to how much EBIDA can be adjusted? ... 37
G.16. Do PPP loans count as "outstanding debt" for purposes of Main Street? ... 37
G.17. How will Eligible Borrower prepayments of a Main Street loan be applied against the principal amount due and future amortization payments? ... 39
G.18. Can permissible fees charged at the time of origination be included in the principal amount of a Main Street loan? ... 39
G.19. Are Eligible Lenders allowed to include a LIBOR floor in the interest rate on a Main Street Loan? ... 39
G.20. [Reserved.] ... 39
G.21. Are there any prohibitions on the use of proceeds of a Main Street loan? ... 39
G.22. Is an Eligible Lender restricted from setting monthly or quarterly interest payments after the first year, or will interest be required to be payable annually along with amortization payments of principal? ... 40
G.23. Can an Eligible Lender require an Eligible Borrower to provide collateral or guarantees solely with respect to the Eligible Lender's 5% retained portion of a Main Street loan? ... 40
G.24. Are personal guarantees required and/or permitted? ... 40
G.25. If an Eligible Borrower's outstanding debt is maturing within 90 days, can a Main Street loan be used to refinance such debt at the time of origination? ... 41
G.26. Can an Eligible Lender or Eligible Borrower hedge interest rate and credit risk in connection with Main Street loans? ... 41
G.27. Can Eligible Lenders and Eligible Borrowers agree to include cash collateral deposits, compensating balances, cash reserve accounts, or cash escrow accounts at origination or during the life of a Main Street loan as part of the loan terms? ... 41
H. Certifications and Covenants ... 42
H.1. Are the required certifications and covenants under the NONLF and the NOELF the same? ... 42
H.2. What compensation, stock repurchase and capital distributions restrictions apply? ... 42
H.3. What restrictions are placed on the Eligible Borrower's ability to repay existing debt? ... 42
H.4. Is an Eligible Lender permitted to accept partial repayment of an Eligible Borrower's existing line of credit with the Eligible Lender? ... 43
H.5. What restrictions are placed on an Eligible Lender's ability to cancel or reduce any existing committed lines of credit outstanding? ... 43
H.6. What is the Eligible Lender's role in verifying certifications and covenants? ... 43
H.7. What debt and interest payments are considered "mandatory and due"? ... 44
H.8. Can an Eligible Borrower receive an NONLF Loan or an NOELF Upsized Tranche if its existing debt arrangements require prepayment of an amount that is not de minimis upon the incurrence of new debt? ... 44
H.9. How must a Main Street borrower demonstrate that it is "unable to secure adequate credit accommodations from other banking institutions"? ... 45
H.10. How should Eligible Borrowers prepare financial records and make financial calculations in connection with section 4.A of the Borrower Certifications and Covenants? ... 45
H.11. In certifying that an Eligible Borrower or Eligible Lender is not a "covered entity" under the conflicts of interest certification, what level of reasonable diligence is required with regard to equity interests (including non-voting preferred stock) held by financial intermediaries? ... 46
H.12. How should Eligible Borrowers calculate "total compensation" for purposes of complying with limits on compensation under the direct loan restrictions? ... 48
H.13. What if an Eligible Borrower chooses, at the time of disbursement of the Main Street loan, to calculate total compensation using the federal tax rules for all officers or employees that were not Significant Deferred Compensation Recipients (as defined in question H.12), and the Eligible Borrower later increases the amount of deferred compensation so that one or more of these individuals become Significant Deferred Compensation Recipients? ... 49
H.14. [Reserved.] ... 50
H.15. [Reserved.] ... 50
H.16. [Reserved.] ... 50
H.17. [Reserved.] ... 50
H.18. Do certifications and covenants apply to successors? ... 50
H.19. How do the compensation, capital distribution, and stock repurchase restrictions apply to an organization in which more than one entity borrows from the Main Street Lending Program? ... 50
H.20. [Reserved.] ... 51
H.21. [Reserved.] ... 51
H.22. Do restrictions on compensation apply to loans made by an Eligible Borrower to an employee or officer of such Eligible Borrower? ... 51
H.23. [Reserved.] ... 51
H.24. How should I read the term "Borrower" in the Borrower Certifications and Covenants for multi-borrower loans? ... 51
H.25. How should I read the term "Borrower" in the Lender Transaction Specific Certifications and Covenants for multi-borrower loans? ... 52
I. Lender Information ... 54
I.1. Which financial institutions are eligible to make loans under the Program? ... 54
I.2. How should an Eligible Lender evaluate an Eligible Borrower's creditworthiness? ... 54
I.3. Can multiple affiliated Eligible Lenders participate in Main Street? ... 54
I.4. Will standard loan documents be provided for Main Street loans, or should Eligible Lenders use their own loan documentation? ... 54
I.5. How should an Eligible Lender account for the transfer of an undivided participation interest in the loan to the Main Street SPV? ... 55
I.6. Do the participation interests purchased by the Main Street SPV under the Program constitute "true participations"? ... 56
I.7. Does the sale of participation interests to the Main Street SPV meet the criteria for a true sale under the Bankruptcy Code? ... 57
I.8. Does the Main Street SPV have the right to put back the participation interests to the Eligible Lender? ... 58
I.9. Do the participation interests purchased by the Main Street SPV potentially qualify for a "safe harbor" in relation to FDIC resolution proceedings? ... 59
I.10. Do the participation interests purchased by the Main Street SPV potentially qualify for a "safe harbor" in relation to NCUA resolution proceedings? ... 59
I.11. Does the Servicing Agreement contemplated between the Eligible Lender and the Main Street SPV impact whether the sale of participation interests can be considered a "true sale"? ... 60
I.12. Will payment-in-kind ("PIK") interest that has accrued (but has not yet been capitalized to principal) during the period of time starting on the date when the loan agreement is funded to the date when the loan participation purchase is funded be allocated to the Seller (i.e., the Eligible Lender)? ... 60
I.13. Can an Eligible Lender that is a depository institution pledge its 5% of a Main Street loan to a Federal Reserve Bank as collateral? ... 60
I.14. Does a lender registered with the Program for purposes of the MSNLF, MSELF, and MSPLF need to re-register to become an Eligible Lender for purposes of the NONLF and NOELF? ... 61
I.15. Must Main Street loan documents be governed by U.S. law? ... 61
J. Loan Participation ... 61
J.1. What loan documentation is required to sell a participation to the Main Street SPV under the Program? ... 61
J.2. What loan-level information will the SPV collect for credit monitoring purposes? ... 61
J.3. Is there a limit to the volume of participations the Main Street SPV can purchase from a single Eligible Lender? ... 61
J.4. Under the Loan Participation Agreement, when can the Main Street SPV sell its loan participation or elevate its loan participation into an assignment? ... 61
J.5. What role will the Main Street SPV play in the event an Eligible Borrower enters distress? ... 62
J.6. How will the Main Street SPV approach decision-making with respect to its voting rights under the Loan Participation Agreement or Co-Lender Agreement? ... 63
J.7. Will the Main Street SPV assert special administrative priority under Section 507(a)(2) of the Bankruptcy Code for its claims against an Eligible Borrower in bankruptcy proceedings? ... 63
J.8 How can an Eligible Lender obtain instructions from the Main Street SPV in relation to a "Core Rights Act" under the Participation Agreement? ... 64
K. Regulatory Treatment ... 65
K.1. What is the regulatory capital treatment for the interest in a Main Street loan retained by an Eligible Lender? ... 65
K.2. How will Program loans be treated for supervised firms subject to stress testing? ... 66
K.3. Are Main Street loans for existing customers considered new accounts for FinCEN Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial ownership information in accordance with the rule requirements for existing customers? ... 66
K.4. How will federal supervisors treat loans extended through the Main Street program? ... 66
K.5. For an Eligible Lender that is a national bank or savings association, do lending limits apply to the entire size of a Main Street loan, or only the percentage of a loan that is retained by the Eligible Lender? ... 67
K.6. For Eligible Lenders that are federally insured credit unions, does the member business loan limit apply to the entire size of a Main Street loan, or only the percentage of a loan that is retained by the Eligible Lender? ... 68
K.7. For Eligible Lenders that are federally insured credit unions, does the limit on commercial loans to one member apply to the entire size of a Main Street loan, or only the percentage of a loan that is retained by the Eligible Lender? ... 68
K.8. [Reserved.] ... 69
L. Operational Details ... 69
L.1. How will the Federal Reserve administer the Program? ... 69
L.2. What information will the Federal Reserve disclose regarding the Main Street facilities? ... 69
L.3. How will the remaining capacity of the Program be communicated? ... 70
L.4. Are Eligible Lenders required to commit and pre-fund loans under the Program before the SPV has committed to purchase its participation in a Program Loan? ... 70
L.5. [Reserved.] ... 71
L.6. [Reserved.] ... 71
L.7. What conditions will the Main Street SPV place on purchasing participations in Program loans? ... 71
L.8. What financial information is an Eligible Borrower required to submit to an Eligible Lender at the time of origination of a Main Street loan? What Eligible Borrower financial information is an Eligible Lender required to submit to the Main Street Portal with other loan participation documentation? ... 72
L.9. What information is an Eligible Lender required to submit to the Main Street Portal in connection with the submission of the documentation required to sell a loan participation to the Main Street SPV? ... 74
L.10. What type of Lender Portal security is in place, such that lenders and borrowers can be assured that their data will be maintained securely? ... 76
L.11. If an Eligible Lender uses the Condition of Funding Model in Question L.4, how should loan documents be prepared to reflect the required maturity period, interest rate, deferral and accrual, principal amortization, and loan number? ... 76
L.12. Can a single Main Street loan be made to multiple co-borrowers? ... 77
L.13. By what date should Eligible Lenders submit loans to the Main Street SPV for purchase of a participation interest? ... 77
M. Other Information ... 78
M.1. Where should questions regarding the Program be directed? ... 78
M.2. How can I receive updates regarding changes to the Program? ... 78
M.3. Will the Federal Reserve provide further guidance on how to apply the terms of the Program to individual borrowers? ... 79
M.4. Are recordings of Main Street webinar sessions available? ... 79
M.5. Where can I find instructions for how to complete the Main Street legal forms and agreements? ... 79
Appendix A: Loan Document Checklist ... 81
Appendix B: Required Covenants in Loan Documentation ... 84
I. Priority and Security Covenant ... 84
II. Borrower Certifications and Covenants Material Breach Mandatory Prepayment Provision ... 86
III. Cross-Acceleration Provision ... 87
IV. Financial Reporting Covenant ... 88
Appendix C: Required Financial Reporting ... 90

A. Purpose and Design

A.1. Why is the Federal Reserve expanding the Program to include nonprofit organizations?

The spread of COVID-19 has harmed communities and substantially disrupted many sectors of the economy, including the nonprofit sector. In many cases, the disruptions have heightened the demand for nonprofit organization services and the need for such organizations to obtain financing. Nonprofit organizations are critical parts of the economy, employing millions of people, providing essential services to communities, and supporting innovation and the development of a highly skilled workforce.

The Main Street Lending Program Nonprofit Organization New Loan Facility (NONLF) and Nonprofit Organization Expanded Loan Facility (NOELF) are designed to provide support to small and medium-sized nonprofit organizations and their employees across the United States during the current period of financial strain by supporting the provision of credit to such organizations. The availability of additional credit is intended to help nonprofit organizations that were in sound financial condition prior to the onset of the COVID-19 pandemic maintain their operations and payroll until conditions normalize.

A.2. How is the Department of the Treasury supporting the Program?

The Department of the Treasury (Treasury Department) will make a $75 billion equity investment in a Special Purpose Vehicle (Main Street SPV) in connection with the Main Street Lending Program, which includes the nonprofit facilities. The funds invested by the Treasury Department were appropriated to the Exchange Stabilization Fund under section 4027 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

A.3. Are loans that are originated or upsized in connection with the Program forgivable?

No. Main Street loans are full-recourse loans and are not forgivable. Under section 4003(d)(3) of the CARES Act, the principal amount of a Main Street loan cannot be reduced through loan forgiveness.

A.4. What are the differences between the NONLF and the NOELF?

Main Street includes two facilities designed for nonprofit organizations, each of which was authorized by the Board of Governors of the Federal Reserve System (Board) under section 13(3) of the Federal Reserve Act. Both facilities use the same Eligible Lender and Eligible Borrower criteria, and have many of the same features, including the same maturity, interest rate, deferral of principal for two years, deferral of interest for one year, and ability of the borrower to prepay without penalty.

Other features of the loans extended in connection with each facility differ, including with respect to the loan size and its relationship to existing debt.

- NONLF: Eligible Lenders extend new five-year term loans to Eligible Borrowers ranging in size from $100,000 to $35 million. The maximum size of a loan made in connection with the NONLF cannot exceed the Eligible Borrower's average 2019 quarterly revenue. The loans must not be, at the time of origination or at any time during the term of the Eligible Loan, contractually subordinated in terms of priority to any of the Eligible Borrower's other loans or debt instruments. The unique features of loans originated in connection with the NONLF (NONLF Loans) are provided in the NONLF term sheet.
- NOELF: Eligible Lenders increase (or "upsize") an Eligible Borrower's existing term loan or revolving credit facility. The upsized tranche is a five-year term loan ranging in size from $10 million to $300 million. The maximum size of a loan made in connection with the NOELF cannot exceed the Eligible Borrower's average 2019 quarterly revenue. At the time of upsizing and at all times thereafter, the upsized tranche must be senior to or pari passu with, in terms of priority and security, the Eligible Borrower's other loans or debt instruments, other than mortgage debt. The features associated with tranches of loans that are upsized in connection with the NOELF (NOELF Upsized Tranches) are outlined in the NOELF term sheet.

A.5. How long will the Program be in effect?

Pursuant to section 1005 of the Consolidated Appropriations Act, 2021, the Board and the Secretary have extended the Program until January 8, 2021, provided that after December 31, 2020, the Main Street SPV will purchase only participations in Eligible Loans initially submitted to the Main Street lender portal on or before December 14, 2020. See question L.13 for further information on the Program's termination timeline.

A.6. Is there a limit to the size of the Program?

The Main Street SPV will purchase up to $600 billion of participations in eligible loans across all Main Street Program facilities. The Federal Reserve and the Treasury Department have assessed this amount to be appropriate in light of the current financial strains facing Eligible Borrowers. The Federal Reserve and the Treasury Department will continue to assess the situation and needs of Eligible Borrowers and may adjust the Program's size in the future.

A.7. What are the differences between the Program and the Paycheck Protection Program and Primary Market Corporate Credit Facility?

Similar to the Paycheck Protection Program (PPP) and the Primary Market Corporate Credit Facility (PMCCF), Main Street was created to assist companies that have been adversely affected by the COVID-19 pandemic. Each of these programs, however, was developed to provide liquidity to companies of different sizes:

- PPP: The PPP was established by the CARES Act and implemented by the Small Business Administration (SBA) to support the payroll and operations of small businesses (including small nonprofit organizations) through the issuance of government-guaranteed loans that include a forgiveness feature for borrowers that satisfy the requirements of the PPP.
- Main Street: The Federal Reserve designed Main Street to support small and medium-sized for-profit businesses and nonprofit organizations that were unable to access the PPP or that require additional financial support after receiving a PPP loan. Main Street loans are not forgivable.
- PMCCF: The Federal Reserve established the PMCCF to support large companies through the purchase of eligible corporate bonds from, and lending through syndicated loans to, large companies. PMCCF loans are not forgivable.

A.8. What provisions of the CARES Act apply to the Program?

Under section 4003(b)(4) of the CARES Act, the Secretary of the Treasury (Secretary) is authorized to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board for the purpose of providing liquidity to the financial system that supports lending to eligible businesses (including, for these purposes, eligible nonprofits), states, or municipalities. The Secretary has committed $75 billion of the funds appropriated under Title IV of the CARES Act in the Main Street SPV in support of the Program. The following restrictions of the CARES Act have been incorporated into the design of the Program:

- Eligible Business Definition: Section 4002(4) of the CARES Act prevents a business from participating in the Program if it has "otherwise received adequate economic relief in the form of loans or loan guarantees provided under [the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act)]." Consistent with this restriction, businesses that are receiving "specific support" pursuant to section 4003(b)(1)-(3) are not eligible for the Program.
- Direct Loans: Eligible Borrowers must commit to comply with the restrictions that apply to direct loan programs under section 4003(c)(3)(A)(ii) of the CARES Act.
- U.S. Business Requirement: Under section 4003(c)(3)(C) of the CARES Act, Eligible Borrowers must be "businesses that are created or organized in the United States or under the laws of the United States and that have significant operations in and a majority of its employees based in the United States."
- Loan Forgiveness Prohibition: Under section 4003(d)(3), the principal amount of the portion of any NONLF Loan, or NOELF Upsized Tranche that is participated to the Main Street SPV cannot be reduced through loan forgiveness. See question A.10 for more information about this requirement.
- Conflicts of Interest: Under section 4019 of the CARES Act, Eligible Lenders and Eligible Borrowers will be required to certify that no "Covered Individual" owns, controls, or holds 20% or more (by vote or value) of any class of equity ownership interest in the business.[1] "Covered Individuals" include the President, the Vice President, the head of any Executive Department, any Member of Congress, and certain immediate family members of the foregoing.

A.9. What are the conflicts of interest provisions of the CARES Act?

Section 4019 of the CARES Act prohibits entities in which certain government officials (list here) and some of their immediate family members have a "controlling interest" from participating in certain government programs, including Main Street. Each participating entity, both Eligible Lenders and Eligible Borrowers, will be required to certify that the entity is not a "covered entity" as defined in section 4019 of the CARES Act. Detailed instructions are provided in the Lender Registration Certifications and Covenants and the NONLF and NOELF Borrower Certifications and Covenants.

[1] For purposes of the NONLF and NOELF, an Eligible Borrower alternatively would be permitted to certify that the Eligible Borrower does not have and cannot issue equity interests, such that Section 4019(c) of the CARES Act is inapplicable.

A.10. Can the principal amount of loans extended under Main Street be reduced?

Main Street is not a grant program and is subject to the prohibition on loan forgiveness in section 4003(d)(3) of the CARES Act. In the event of restructurings or workouts, the Main Street SPV may agree to reductions in interest (including capitalized interest), extended amortization schedules and maturities, and higher priority "priming" loans.

B. NONLF Loans

B.1. How does the NONLF work?

Eligible Lenders may extend a new NONLF Loan to an Eligible Borrower and sell a 95% participation in that NONLF Loan to the Main Street SPV at par value. All such sales will be structured as "true sales" and must be completed expeditiously after the origination of the NONLF Loan. The Eligible Lender must retain 5% of the NONLF Loan until (i) it matures or (ii) neither the Main Street SPV nor a Governmental Assignee holds an interest in NONLF Loan in any capacity, whichever comes first. The Main Street SPV and the Eligible Lender would share in any losses on the NONLF Loan on a pari passu basis.

The Eligible Borrower must have been in sound financial condition prior to the onset of the COVID-19 pandemic. In order for an Eligible Borrower to receive an NONLF Loan, any existing loan it had outstanding with the Eligible Lender as of December 31, 2019, must have had an internal risk rating (based on the Eligible Lender's risk rating system) that was equivalent to a "pass" in the Federal Financial Institutions Examination Council's (FFIEC) supervisory rating system as of that date.

B.2. What are the terms of NONLF Loans?

The NONLF term sheet is available on the Board's Main Street page. More information will be made available on that page regarding loan participation terms, credit administration, and loan servicing.

B.3. What is the effect of the requirement that NONLF Loans not be "contractually subordinated in terms of priority" to other loans or debt instruments?

An NONLF Loan, at the time of origination or at any time during its term, may not be contractually subordinated in terms of priority to the Eligible Borrower's other loans or debt instruments. This means that an NONLF Loan may not be junior in priority in bankruptcy to the Eligible Borrower's other unsecured loans or debt instruments.[2] This provision does not prevent:

- the issuance of an NONLF Loan that is a secured loan (including in a second lien or other capacity) to an Eligible Borrower, whether or not the Eligible Borrower has an outstanding secured loan of any lien position or maturity;
- the issuance of an NONLF Loan that is an unsecured loan to an Eligible Borrower, regardless of the term or secured or unsecured status of the Eligible Borrower's existing indebtedness; or
- the Eligible Borrower from taking on new secured or unsecured debt after receiving an NONLF Loan, provided the new debt would not have higher contractual priority in bankruptcy than the NONLF Loan.

B.4. Can an Eligible Lender make an NONLF Loan to a new customer?

Yes. Eligible Lenders should follow their normal policies and procedures for originating a loan to a new customer, including Know Your Customer procedures. In addition, when determining borrower eligibility, the Eligible Lender must require the Eligible Borrower to use an adjusted EBIDA methodology that is based on a methodology that the Eligible Lender has previously required to be used to adjust EBIDA when extending credit to similarly situated borrowers on or before June 15, 2020. The Eligible Lender should calculate operating revenue as unrestricted operating revenue, excluding funds committed to be spent on capital, and including a proxy for endowment income in place of unrestricted investment gains or losses. The methodology used by the Eligible Lender to calculate the proxy for endowment income must be the methodology it has used for similarly situated borrowers on or before June 15, 2020.

C. [Reserved.]

D. NOELF Upsized Tranches

D.1. How does the NOELF work?

Eligible Lenders that have extended an existing term loan or revolving credit facility to an Eligible Borrower may increase (or "upsize") that extension of credit, by adding a new increment (or "tranche"). Eligible Lenders may sell a 95% participation in the NOELF Upsized Tranche to the Main Street SPV at par value. All such sales will be structured as "true sales" and must be completed expeditiously after the upsizing. The Eligible Lender must retain 5% of the NOELF Upsized Tranche until (i) it matures or (ii) neither the Main Street SPV nor a Governmental Assignee holds an interest in the NOELF Upsized Tranche in any capacity, whichever comes first. The Eligible Lender must also retain its interest in the underlying loan until (i) that loan matures, (ii) the NOELF Upsized Tranche matures, or (iii) neither the Main Street SPV nor a Governmental Assignee holds an interest in the NOELF Upsized Tranche in any capacity, whichever comes first. The Main Street SPV and the Eligible Lender would share in any losses on the NOELF Upsized Tranche on a pari passu basis. Any collateral that secures the underlying loan must secure the upsized tranche on a pari passu basis.

[2] For the avoidance of doubt, prohibitions on contractual subordination with respect to Main Street loans do not prevent the incurrence of obligations that have mandatory priority under the Bankruptcy Code or other insolvency laws that apply to entities generally.

To be eligible for "upsizing," the existing term loan or revolving credit facility must have been originated on or before June 15, 2020, and must have a remaining maturity of at least 18 months. The Eligible Lender may extend the maturity of an existing loan or revolving credit facility at the time of upsizing in order for the underlying instrument to satisfy the 18-month remaining maturity requirement.

The Eligible Borrower must have been in sound financial condition prior to the onset of the COVID-19 pandemic. The existing loan or revolving credit facility must have had a risk rating, based on the Eligible Lender's internal rating system, equivalent to a "pass" in the FFIEC's supervisory rating system as of December 31, 2019.

D.2. What are the terms of NOELF Upsized Tranches?

The NOELF term sheet is available on the Board's Main Street page. More information will be made available on that page regarding loan participation terms, credit administration, and loan servicing.

D.3. Under the NOELF, can an Eligible Lender sell a participation in an upsized tranche of a loan that was originated as part of a multi-lender facility?

If the loan underlying an NOELF Upsized Tranche is part of a multi-lender facility, the Eligible Lender must be one of the lenders that holds an interest in the underlying loan at the date of upsizing. Only the Eligible Lender for the NOELF Upsized Tranche is required to meet the Eligible Lender criteria. Other members of the multi-lender facility are not required to be Eligible Lenders.

More than one lender under an existing multi-lender facility may choose to "upsize" the existing facility to originate an NOELF Upsized Tranche. Such NOELF Upsized Tranches should be separately submitted to the SPV for the sale of a participation interest. However, the Eligible Borrower's aggregate borrowing is constrained by the NOELF maximum loan size test and, therefore, the Eligible Borrower's aggregate borrowing cannot exceed $300 million or its average 2019 quarterly revenue.

D.4. Does the Eligible Lender for the NOELF Upsized Tranche need to be the same Eligible Lender that originated the underlying loan?

No. The Eligible Lender is not required to have been the Eligible Lender that originally extended the loan underlying an NOELF Upsized Tranche. If the Eligible Lender purchased the interest in the underlying loan as of December 31, 2019, the Eligible Lender must have assigned an internal risk rating to the underlying loan equivalent to a "pass" in the FFIEC's supervisory rating system as of that date. If the Eligible Lender purchased the interest after December 31, 2019, the Eligible Lender should use the internal risk rating given to that loan at the time of purchase to determine whether the loan is eligible for upsizing under the NOELF.

The position that an Eligible Lender relies upon to upsize a loan in connection with the NOELF may have been purchased from an Eligible Lender or a non-eligible lender.

D.5. If an existing multi-lender facility loan does not have an "opening" or "accordion" clause, can it still be eligible for upsizing under the NOELF?

Yes. The Eligible Borrower, Eligible Lender(s), and any other required parties must amend the underlying credit agreements as needed to comply with the requirements set out in the NOELF term sheet.

D.6. What requirements exist for the loan underlying an NOELF Upsized Tranche?

The loan underlying an NOELF Upsized Tranche can be a secured or unsecured term loan or revolving credit facility that:

- was made by an Eligible Lender(s) to an Eligible Borrower;
- is currently held, at least in part, by an Eligible Lender;
- was originated on or before June 15, 2020;
- has a remaining maturity of at least 18 months (taking into account any adjustments made to the maturity of the loan after June 15, 2020, including at the time of upsizing); and
- received an internal risk rating equivalent to a "pass" in the FFIEC's supervisory rating system by the Eligible Lender, as of December 31, 2019, or otherwise satisfies the criteria set out in question D.10.

Any collateral securing the underlying credit facility (at the time of upsizing or on any subsequent date) must secure the NOELF Upsized Tranche on a pari passu basis.[3]

D.7. Why is the minimum loan size for an NOELF Upsized Tranche $10 million, rather than $100,000 in the NONLF?

The NOELF was designed to meet the needs of borrowers with existing loan arrangements, particularly those with larger and more complex existing loans, where pre-existing loan documentation can be used. As a result, the minimum loan size for an NOELF Upsized Tranche is $10 million.

The Federal Reserve will continue to evaluate whether the loan amounts allowed under the Program should be adjusted to enhance the Program's efficacy. Any such adjustments would be communicated well in advance of their effective date to ensure that Eligible Lenders and Eligible Borrowers are not adversely affected.

D.8. Can the Eligible Lender that sells a participation to the Main Street SPV share its 5% retention of the NOELF Upsized Tranche with other members of a multi-lender facility?

No. The Eligible Lender must retain 5% of the NOELF Upsized Tranche, even when the underlying loan is part of a multi-lender facility. The Eligible Lender must retain 5% of the NOELF Upsized Tranche until (A) the NOELF Upsized Tranche matures or (B) neither the Main Street SPV nor a Governmental Assignee holds an interest in the loan in any capacity, whichever occurs first.

D.9. What if no EBIDA methodology or proxy for endowment income methodology was used when originating or amending the loan underlying an NOELF Upsized Tranche?

If the Eligible Borrower's EBIDA or proxy for endowment income were not calculated or included in the loan documentation or internal risk analysis when originating the loan or revolving credit facility that would underlie an NOELF Upsized Tranche, the Eligible Lender must require the Eligible Borrower to calculate its adjusted EBIDA or a proxy for endowment income using a methodology that the Eligible Lender has required to be used in other contexts for the Eligible Borrower or, if there is no such calculation, for similarly situated borrowers. See questions G.13 and G.14 for more information.

[3] For the avoidance of doubt, Eligible Lenders and Eligible Borrowers may not reduce or restructure the underlying credit facility prior to the origination of the NOELF Upsized Tranche in order to evade the requirement that collateral deemed sufficient by the bank prior to June 15, 2020, be shared on a pari passu basis with the Main Street SPV.

D.10. How can the "pass" criterion be satisfied if the loan underlying an upsized tranche was originated or purchased by an Eligible Lender after December 31, 2019?

If an existing loan was originated or purchased by an Eligible Lender after December 31, 2019, the Eligible Lender should use the internal risk rating given to that loan at origination or purchase (as applicable) to determine whether the loan satisfies the "pass" criterion for upsizing under the NOELF.

D.11. What does it mean for an NOELF Upsized Tranche to be "senior to or pari passu with, in terms of priority and security, the Eligible Borrower's other loans or debt instruments, other than mortgage debt"?

NOELF Upsized Tranches must be senior to or pari passu with, in terms of priority and security, the Eligible Borrower's other Loans or Debt Instruments, other than Mortgage Debt (the NOELF Priority and Security Requirement). The NOELF Priority and Security Requirement is designed to prevent NOELF Upsized Tranches from being subordinated or otherwise disadvantaged in terms of priority or security in relation to the other Loans or Debt Instruments of the Eligible Borrower, except for Mortgage Debt.

For purposes of the NOELF Priority and Security Requirement:

- "Loans or Debt Instruments" means debt for borrowed money and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, and all guarantees of the foregoing.
- "Mortgage Debt" means (i) debt secured only by real property at the time of the NOELF Upsized Tranche's origination; and (ii) limited recourse equipment financings (including equipment capital or finance leasing and purchase money equipment loans) secured only by the acquired equipment.

Time of Origination: To comply with the NOELF Priority and Security Requirement at the time of origination, Eligible Lenders and Eligible Borrowers must apply the following guidance:

- Secured Loans: The NOELF Upsized Tranche must be secured if, at the time of origination, the Eligible Borrower has any other secured Loans or Debt Instruments, other than Mortgage Debt. The NOELF Upsized Tranche must be secured by the collateral (including, if applicable, any Mortgage Debt) securing any other tranche of the underlying credit facility on a pari passu basis. Eligible Lenders and Eligible Borrowers may add new collateral to secure the loan (including the NOELF Upsized Tranche on a pari passu basis) at the time of upsizing. If the underlying credit facility includes both term loan tranche(s) and revolver tranche(s), the NOELF Upsized Tranche needs to share collateral on a pari passu basis with the term loan tranche(s) only.[4] Secured NOELF Upsized Tranches must not be contractually subordinated in terms of priority to any of the Eligible Borrower's other Loans or Debt Instruments.
- Unsecured Loans: The NOELF Upsized Tranche can be unsecured only if the Eligible Borrower does not have, as of the date of origination, any secured Loans or Debt Instruments (other than Mortgage Debt that does not secure any other tranche of the underlying credit facility). Unsecured NOELF Upsized Tranches must not be contractually subordinated in terms of priority to the Eligible Borrower's other unsecured Loans or Debt Instruments. See question B.3 for more information on contractual subordination.

Life of the Loan: In order to comply with the NOELF Priority and Security Requirement during the term of the NOELF Upsized Tranche after the date of origination, the loan documentation for the NOELF Upsized Tranche must:

- ensure that the NOELF Upsized Tranche does not become contractually subordinated in terms of priority to any of the Eligible Borrower's other Loans or Debt Instruments;
- ensure that the NOELF Upsized Tranche remains secured on a pari passu basis by the collateral securing the underlying credit facility, as described in the "time of origination" section above; and
- contain a lien covenant or negative pledge that is of the type – and contains exceptions, limitations, carve-outs, baskets, materiality thresholds, and qualifiers – that are consistent with those used by the Eligible Lender in its ordinary course lending to similarly situated borrowers.
  - Appendix B contains a model lien covenant that Eligible Lenders should reference when drafting NOELF loan documentation.
  - With respect to an underlying credit facility that has more than one lender, any lien covenant that was negotiated in good faith prior to June 15, 2020, as part of any underlying NOELF Loan, is sufficient to satisfy this requirement.

See question G.14 for more information on identifying similarly situated borrowers. See the NOELF Borrower Certifications and Covenants and NOELF Lender Transaction Specific Certifications and Covenants for more information about the responsibilities that Borrowers and Lenders have in relation to the NOELF Priority and Security Requirement.

[4] For the avoidance of doubt, Eligible Lenders and Eligible Borrowers may not create a new term loan tranche in what was solely a revolving credit facility prior to June 15, 2020, in order to evade the requirement that collateral deemed sufficient by the bank prior to June 15, 2020, be shared on a pari passu basis with the Main Street SPV.

D.12. Are Eligible Lenders required to hold all of their positions in the credit facility underlying an NOELF Upsized Tranche for the life of the loan?

After originating an NOELF Upsized Tranche, the Eligible Lender must retain its interest in the credit facility underlying an NOELF Upsized Tranche until (i) the underlying credit facility matures, (ii) the NOELF Upsized Tranche matures, or (iii) neither the Main Street SPV nor a Governmental Assignee holds an interest in the NOELF Upsized Tranche in any capacity, whichever comes first.[5] This requirement is intended to apply to position(s) that an Eligible Lender holds in the underlying credit facility for investment purposes, and is not generally intended to extend to the purchase or sale of short-term positions by an Eligible Lender's trading desk with unaffiliated parties for market-making purposes. In order to be treated as a market-making position under this exemption, the following conditions must be met:

(i) the position cannot be the position the Eligible Lender relied upon in order to upsize the loan (i.e., it cannot be an Eligible Lender's only position in the underlying credit facility);
(ii) the position must be purchased or sold by a trading desk in a transaction with an unaffiliated party, and must be segregated from the position the lender relied upon to upsize the loan; and
(iii) the position must be held in an available-for-sale capacity in anticipation of reasonably expected near term demand.

If an Eligible Lender comes into possession of additional positions in the underlying credit facility after the upsizing of such facility in connection with the NOELF, it is not required to retain such new positions.

[5] For the avoidance of doubt, the Eligible Lender may sell down part of its interest in the underlying credit facility before originating the NOELF Upsized Tranche.

E. Borrower Eligibility

E.1. Which entities are eligible to borrow under the Program?

To be eligible to borrow under the Program, a nonprofit organization must satisfy certain eligibility criteria, as set out in the NONLF and NOELF term sheets and described further below. The Eligible Borrower criteria are the same across both facilities that facilitate lending to nonprofit organizations.

(1) The Nonprofit Organization must have been in continuous operation since January 1, 2015. A Nonprofit Organization has been in "continuous operation" if that organization, or a predecessor organization, was established on or before January 1, 2015, and has been engaged in activities in furtherance of its tax-exempt purpose since that date.[6] In addition, the Nonprofit Organization must have been formed under the laws of the United States, one of the several states, the District of Columbia, any of the territories and possessions of the United States, or an Indian Tribal government.

(2) The Nonprofit Organization must not be an Ineligible Business. Ineligible Businesses include Businesses listed in 13 CFR 120.110(b)-(j), (m)-(s), as modified and clarified by SBA regulations for purposes of the PPP on or before April 24, 2020. Such modifications and clarifications include the SBA's recent interim final rules available at 85 Fed. Reg. 20811, 85 Fed. Reg. 21747, and 85 Fed. Reg. 23450 (released by the SBA on April 24, 2020). In addition, the Federal Reserve has incorporated the SBA's Interim Final Rules published in the Federal Register on June 18, 2020 (85 Fed. Reg. 36717) and June 26, 2020 (85 Fed. Reg. 38301), which amended the SBA's earlier Interim Final Rule published in the Federal Register on April 15, 2020 (85 Fed. Reg. 20811). The Federal Reserve may further modify the application of these restrictions to Main Street.

(3) The Nonprofit Organization must meet at least one of the following two conditions: (a) the Nonprofit Organization has 15,000 employees or fewer, or (b) the Nonprofit Organization has 2019 annual revenues of $5 billion or less. To determine how many employees a Nonprofit Organization has or a Nonprofit Organization's 2019 revenues, the employees and revenues of the Nonprofit Organization must be aggregated with the employees and revenues of its affiliated entities.

(4) The Nonprofit Organization must have at least 10 employees. Nonprofit Organizations must have at least 10 employees at the time of origination of the NONLF Loan or NOELF Upsized Tranche. The requirement that the Nonprofit Organization has at least 10 employees applies to the Nonprofit Organization with its affiliated entities. See E.3 for definition of employee.

(5) The Nonprofit Organization must have an endowment of less than $3 billion. The size of the endowment should be calculated as of the date of origination of the NONLF Loan or NOELF Upsized Tranche.

(6) The Nonprofit Organization must have total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019. Non-donation revenues equal gross revenues minus donations. Donations include proceeds from fundraising events, federated campaigns, gifts, donor-advised funds, and funds from similar sources, but exclude (i) government grants, (ii) revenues from a supporting organization, (iii) grants from private foundations that are disbursed over the course of more than one calendar year, and (iv) any contributions of property other than money, stocks, bonds, and other securities (noncash contributions), provided that such noncash contribution is not sold by the organization in a transaction unrelated to the organization's tax-exempt purpose. Expenses equal total expenses minus depreciation, depletion, and amortization. See question E.16 for more detail on this calculation.

(7) The Nonprofit Organization must have a ratio of adjusted 2019 earnings before interest, depreciation and amortization (EBIDA) to unrestricted 2019 operating revenue, greater than or equal to 2%. The methodology used by the Eligible Lender to calculate adjusted 2019 EBIDA must be the methodology it has previously used for adjusting EBIDA when extending credit to the Eligible Borrower or similarly situated borrowers on or before June 15, 2020 (with respect to the NONLF), or when originating or amending the underlying loan on or before June 15, 2020 (with respect to the NOELF). The Eligible Lender should calculate "operating revenue" as unrestricted operating revenue, excluding funds committed to be spent on capital, and including a proxy for endowment income in place of unrestricted investment gains or losses. The methodology used by the Eligible Lender to calculate the proxy for endowment income must be the methodology it has used for the Eligible Borrower or similarly situated borrowers on or before June 15, 2020.

(8) The Nonprofit Organization must have a ratio (expressed as a number of days) of (i) liquid assets at the time of origination of the loan or Upsized Tranche to (ii) average daily expenses over the previous year, equal to or greater than 60 days. "Liquid assets" is defined as unrestricted cash and investments that can be accessed and monetized within 30 days. An organization may include in "liquid assets" the amount of cash receipts it reasonably estimates to receive within 60 days related to the provision of services, facilities, or products, or any other program service that exceed its reasonably estimated cash outflows payable within the same 60-day period.

(9) The Nonprofit Organization at the time of origination of the loan or Upsized Tranche must have 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 55%.

(10) The Nonprofit Organization must be organized under the laws of the United States. Under section 4003(c)(3)(C) of the CARES Act, Eligible Borrowers must be Businesses that were created or organized in the United States or under the laws of the United States with significant operations in and a majority of their employees based in the United States.

(11) The Nonprofit Organization may only participate in one of the Main Street facilities (NONLF, NOELF, MSNLF, MSPLF, MSELF) and must not also participate in the PMCCF or the Municipal Liquidity Facility (MLF). An Eligible Borrower may only participate in one of the Main Street facilities: the MSNLF, the MSPLF, the MSELF, the NONLF, or the NOELF. In addition, a Business is not an Eligible Borrower if it participates in the PMCCF or MLF.

(12) The Nonprofit Organization must not have received specific support pursuant to the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act). A Nonprofit Organization is not eligible if it has received support pursuant to section 4003(b)(1)-(3) of the CARES Act.

(13) The Nonprofit Organization must be able to make all of the certifications and covenants required under the Program. See the NONLF and NOELF Borrower Certifications and Covenants for more information.

Borrowers that satisfy all criteria above may apply to an Eligible Lender for a Main Street loan. In the case of multi-borrower loans, each borrower must meet borrower eligibility criteria. See question H.24 for more information. The Eligible Lender is expected to conduct an assessment of each potential borrower's pre-pandemic financial condition and post-pandemic prospects to determine whether the loan is approved.

For the avoidance of doubt, a Nonprofit Organization that has received PPP loans, or that has affiliates that have received PPP loans, is permitted to borrow under Main Street, provided that the Nonprofit Organization is an Eligible Borrower. Borrowers that are not eligible for a Main Street loan should consult the Treasury Department and SBA to determine if they are eligible for other relief programs.

[6] Entities that are currently tax-exempt but were previously for-profit businesses that engaged in the same activities during both periods may include that full history when assessing years of continuous operation.

E.2. How is "Nonprofit Organization" defined?

A Nonprofit Organization is a tax-exempt nonprofit organization described in section 501(c)(3) of the Internal Revenue Code ("IRC") or a tax-exempt veterans' organization described in section 501(c)(19) of the IRC.

- Section 501(c)(3): Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
- Section 501(c)(19): A post or organization of past or present members of the Armed Forces of the United States, or an auxiliary unit or society of, or a trust or foundation for, any such post or organization—
  A. organized in the United States or any of its possessions,
  B. at least 75 percent of the members of which are past or present members of the Armed Forces of the United States and substantially all of the other members of which are individuals who are cadets or are spouses, widows, widowers, ancestors, or lineal descendants of past or present members of the Armed Forces of the United States or of cadets, and
  C. no part of the net earnings of which inures to the benefit of any private shareholder or individual.

Other forms of organization may be considered for inclusion as an Eligible Borrower under the Program at the discretion of the Federal Reserve.

E.3. How should a Nonprofit Organization count employees for purposes of determining eligibility under the Program?

To be an Eligible Borrower, a Nonprofit Organization must meet at least one of the following two conditions: (a) the Nonprofit Organization has 15,000 employees or fewer, or (b) the Nonprofit Organization has 2019 annual revenues of $5 billion or less. In addition, a Nonprofit Organization must have at least 10 employees. To determine how many employees a Nonprofit Organization has, it should follow the framework set out in the SBA's regulation at 13 CFR 121.106. As set out in 13 CFR 121.106, the Nonprofit Organizations should count as employees all full-time, part-time, seasonal, or otherwise employed persons, excluding volunteers and independent contractors. A Nonprofit Organization that is an institution of higher education must exclude student workers participating in a Federal Work Study Program, on the same basis as, and subject to the same conditions and requirements of, the SBA's regulations at 85 Fed. Reg. 27287-90 (May 8, 2020). Nonprofit Organizations should count their own employees and those employed by their affiliates. In order to determine the applicable number of employees, Nonprofit Organizations should use the average of the total number of persons employed by the Eligible Borrower and its affiliates for each pay period over the 12 months prior to the origination or upsizing of the Main Street loan.

E.4. How should a Nonprofit Organization calculate 2019 revenues for purposes of determining eligibility under the Program?

To be an Eligible Borrower, a Nonprofit Organization must meet at least one of the following two conditions: (a) the Nonprofit Organization has 15,000 employees or fewer, or (b) the Nonprofit Organization has 2019 annual revenues of $5 billion or less. To determine its 2019 annual revenues, Nonprofit Organizations must aggregate their revenues with those of their affiliates. Nonprofit Organizations may use either of the following methods to calculate 2019 annual revenues for purposes of determining eligibility:

(1) A Nonprofit Organization may use its (and its affiliates') annual "revenue"[7] per its 2019 U.S. Generally Accepted Accounting Principles-based (U.S. GAAP) audited financial statements; or
(2) A Nonprofit Organization may use its (and its affiliates') annual receipts for the fiscal year 2019, as reported to the Internal Revenue Service. For purposes of the Program, the term "receipts" has the same meaning used by the SBA in 13 CFR 121.104(a).
(3) If a potential borrower (or its affiliate) does not yet have audited financial statements or annual receipts for 2019, the borrower (or its affiliate) should use its most recent audited financial statements or annual receipts.

For the avoidance of doubt, the calculation of 2019 annual revenues includes all revenues, including restricted revenues and non-cash revenues. This method of calculating 2019 revenues should also be used for the purposes of calculating the Nonprofit Organization's "average 2019 quarterly revenue" when determining the maximum loan size under the NONLF or NOELF.

Please see question H.10 with regard to financial records required for other Borrower Certifications and Covenants. Please see Appendix C for the financial records requirements for ongoing financial reporting.

E.5. Which entities are a Nonprofit Organization's affiliates for purposes of the employee and revenue eligibility criteria?

To determine eligibility, a Nonprofit Organization's employees and 2019 revenues are calculated by aggregating the employees and 2019 revenues of the Nonprofit Organization itself with those of the Nonprofit Organization's affiliated entities in accordance with the affiliation test set forth in 13 CFR 121.301(f) (1/1/2019 ed.).

[7] If a borrower's GAAP-compliant financial statements do not include a line item for revenue, but instead include a similar line item (such as "revenue and other forms of support"), the borrower may elect to use such similar line item to calculate its revenues to determine its eligibility and maximum loan size.

E.6. [Reserved.]

E.7. [Reserved.]

E.8. What does "significant operations in the United States" mean?

To determine if an Eligible Borrower has "significant operations" in the United States, the Nonprofit Organization's operations should be evaluated on a consolidated basis together with its subsidiaries, but not its parent companies or sister affiliates. For example, an Eligible Borrower has significant operations in the United States if, when consolidated with its subsidiaries, greater than 50% of the Eligible Borrower's:

- assets are located in the United States;
- annual net income is generated in the United States;
- annual net operating revenues are generated in the United States; or
- annual consolidated operating expenses (excluding interest expense and any other expenses associated with debt service) are generated in the United States.

This is a non-exhaustive list of examples that reflects the principles that should be applied by a potential borrower when evaluating its eligibility under this criterion.

E.9. Can a Nonprofit Organization that is a subsidiary of a foreign company qualify as an Eligible Borrower?

An Eligible Borrower must be created or organized in the United States or under the laws of the United States. For the avoidance of doubt, an Eligible Borrower may be a subsidiary of a foreign entity, provided that the borrower itself is created or organized in the United States or under the laws of the United States, and the borrower on a consolidated basis has significant operations in and a majority of its employees based in the United States. However, an Eligible Borrower that is a subsidiary of a foreign entity must use the proceeds of a Main Street loan only for the benefit of the Eligible Borrower, its consolidated U.S. subsidiaries, and other affiliates of the Eligible Borrower that are U.S. businesses. The proceeds of a Main Street loan may not be used for the benefit of the activities conducted by such Eligible Borrower's foreign affiliates or subsidiaries.

E.10. Can an otherwise eligible Nonprofit Organization borrow if its affiliate has already borrowed under a Main Street Facility, the MLF, or the PMCCF?

An affiliated group of entities can participate in only one Main Street facility, and cannot participate in both a Main Street facility and the MLF or the PMCCF. Therefore, borrowers that are otherwise eligible are subject to the following restrictions:

- If any affiliate of the Nonprofit Organization has participated in the MLF or the PMCCF, the Nonprofit Organization may not borrow under any Main Street facility.
- If an affiliate has previously participated, or has a pending application to participate, in a Main Street facility, the Nonprofit Organization can only participate in Main Street by using the same Main Street facility accessed by its affiliate. For example, if an Eligible Borrower's affiliate has participated in the NONLF, then the Eligible Borrower would only be able to participate in the NONLF and would be prohibited from participating in the NOELF.
- In no case could the affiliated group's total participation in a single Main Street facility exceed the maximum loan size that the entire affiliated group is eligible to receive on a consolidated basis. For example, in the case of the NONLF, the Eligible Borrower's maximum loan size would be the lesser of:
  (1) $35 million (less any amount extended to an affiliate of the Eligible Borrower under the NONLF);
  (2) the Eligible Borrower's average 2019 quarterly revenue; or
  (3) the Eligible Borrower's affiliated group's average 2019 quarterly revenue.

For the avoidance of doubt, if an Eligible Borrower is the only entity in its affiliated group that has sought funding through Main Street, its affiliated group's average 2019 quarterly revenue is not relevant to determining whether that Nonprofit Organization can qualify, except to the extent that the Borrower's subsidiaries are consolidated into its financial statements. (See question H.10 for more information on consolidated financial statements.) If the Eligible Borrower has an affiliate(s) that has previously borrowed or has an application pending to borrow from a Main Street facility, then the entire affiliated group's average 2019 quarterly revenue is relevant to the determining the Eligible Borrower's maximum loan size.

For more information on how to identify an Eligible Borrower's affiliates, see question E.5 above.

E.11. [Reserved.]

E.12. [Reserved.]

E.13. Are Eligible Lenders required to adopt any special compliance procedures to verify that a Borrower is not an "Ineligible Business" under 13 CFR 120.110(o)?

No. The terms of the Program do not impose any verification or other obligations on an Eligible Lender specifically in relation to 13 CFR 120.110(o). As a general matter, Eligible Lenders that are subject to regulations designed to prevent improper insider lending (e.g., the Board's Regulation O (12 CFR part 215)) should maintain compliance with those pre-existing rules and regulations without exception or modification for Main Street.

Under the standard of reasonable, good-faith diligence specified in the Borrower Certifications and Covenants, each prospective Main Street borrower is expected to review the list of Ineligible Businesses in 13 CFR 120.110(b)-(j), (m)-(s), and make a reasonable, good-faith effort to determine if its activities or ownership would cause it to be classified within one of the listed ineligible categories, including 13 CFR 120.110(o).

E.14. [Reserved.]

E.15. How are "total expenses" and "average daily expenses" calculated for purposes of determining Nonprofit Organization eligibility?

Total expenses are equal to total expenses as defined in IRS Form 990 Part IX Line 25 minus depreciation, depletion and amortization as defined in IRS Form 990 Part IX Line 22. A Nonprofit Organization that has not yet filed, or is not required to file, IRS Form 990 reflecting its 2019 financial information may calculate 2019 total expenses either (i) using 2019 audited financial statements that are in accordance with U.S. GAAP or (ii) as described above in accordance with the instructions to the Form 990.

For purposes of the ratio of liquid assets to average daily expenses, a Nonprofit Organization should calculate average daily expenses as its total expenses for 2019, as described above, divided by 365.

E.16. How is "non-donation revenues" calculated for purposes of determining whether a Nonprofit Organization has total non-donation revenues equal to or greater than 60% of expenses for the period from 2017 through 2019?

Nonprofit organizations may refer to the Instructions to IRS Form 990 for purposes of calculating whether they meet the eligibility criteria for non-donation revenues. For purposes of these eligibility criteria, "non-donation revenues" is defined as all of the revenue items described on Part VIII of the IRS Form 990 except revenue from: (i) fundraising events; (ii) federated campaigns; (iii) membership dues; (iv) any contributions from donor advised funds described in line 1d of Part VIII;[8] and (v) all other contributions, gifts, grants, and similar amounts in line 1f of Part VIII except for (A) grants from private foundations that are disbursed over the course of more than one calendar year and (B) specified property. "Specified property" for this purpose is any property contributed to the Nonprofit Organization other than money, stocks, bonds, and other securities, provided that such specified property is not sold by the Nonprofit Organization in a transaction unrelated to its tax-exempt purpose.

[8] For the avoidance of doubt, only the component of line 1d of Part VIII that consists of contributions from donor advised funds must be excluded from non-donation revenues.

The following examples illustrate how different kinds of revenues would be treated for purposes of the non-donation revenues calculation:

- Donations of noncash contributions as described in IRS Form 990:
  - A Nonprofit Organization receives clothing donations from members of the public that it sells in stores it operates and that primarily form the basis of the Nonprofit Organization's exemption from tax. The sale of these items would generate either program service revenues or gross sales of inventory revenues—both separately reported revenue sources on IRS Form 990—for the Nonprofit Organization. The fair market value of the property in this case would be included in non-donation revenues.
- Private grants:
  - A Nonprofit Organization receives a grant from a private foundation that provides for a recurring distribution of funds from 2018 through 2021, to allow the Nonprofit Organization to conduct activities in connection with its charitable purpose. Because this grant is a multi-year grant from the private foundation, it would be included in non-donation revenues.
  - A Nonprofit Organization receives a one-time grant from a private foundation. While the private foundation may provide grants to the Nonprofit Organization in the future, the grant itself pertains only to a single cash gift that is contributed in full to the Nonprofit Organization. Because this grant is not a multi-year grant from the private foundation, it would be excluded from non-donation revenues.
- Membership Dues:
  - A Nonprofit Organization charges membership dues. These membership dues consist of both (1) an amount equal to the fair market value of goods and services provided (for example, access to an athletic facility operated by the Nonprofit Organization), and (2) a charitable contribution, specifically, the amount of the membership dues that exceed the fair market value of the goods and services provided in connection with the membership fee. On IRS Form 990, the amount paid for goods and services would be reported as Program Service Revenues, while the excess amount would be reported as a membership fee. The amount reported as Program Service Revenues would be included in non-donation revenues, while the excess amount—the charitable contribution—would be excluded from non-donation revenues.

E.17. Can a public hospital or a public college or university that is not recognized as tax-exempt under section 501(c)(3) of the IRC qualify as a Nonprofit Organization?

Public hospitals and public colleges and universities may not be recognized as tax-exempt organizations under section 501(c)(3) of the IRC, but may qualify as tax-exempt under another provision of the IRC. These organizations may qualify as an organization described in section 501(c)(3) of the IRC, and thus be considered "Nonprofit Organizations," for purposes of the NONLF and NOELF. To establish eligibility as a Nonprofit Organization, a public hospital or public college or university must reasonably determine, in a written record maintained by the organization, that it is an organization described in section 501(c)(3) of the IRC.[9]

This guidance is solely for purposes of qualification as a "Nonprofit Organization" under the Program and related purposes of the Program, and does not have any consequences for federal tax law purposes.

[9] This determination need not account for the ancillary conditions set forth in section 501(r) of the Internal Revenue Code and elsewhere associated with securing the tax exemption under that section. Section 501(r) states that a hospital organization shall not be treated as described in section 501(c)(3) unless it meets certain community health and other requirements. However, Nonprofit Organization is defined solely by reference to section 501(c)(3), and section 501(r) does not amend section 501(c)(3). Therefore, for purposes of the NONLF and NOELF, the requirements of section 501(r) do not apply to the determination of whether an organization is "described in section 501(c)(3)."

E.18. Is a hospital owned by governmental entities considered an Ineligible Business?

Under 13 CFR 120.110(j), "Government-owned entities (except for businesses owned or controlled by a Native American tribe)" are considered Ineligible Businesses. However, a hospital that is otherwise an Eligible Borrower is not rendered ineligible due to ownership by a state or local government if the hospital receives less than 50% of its funding from state or local government sources, exclusive of Medicaid. This exception to the general ineligibility of government-owned entities is consistent with the approach adopted by the SBA for determining PPP eligibility of hospitals.

E.19. How should a Nonprofit Organization calculate its non-donation revenues and expenses for the period from 2017 through 2019 if it does not have audited financial statements or annual receipts for fiscal year 2019 reported to the IRS?

To be eligible under the NONLF and NOELF, a Nonprofit Organization must have average total annual non-donation revenues equal to or greater than 60% of average annual expenses over the three fiscal years that ended in 2017, 2018, and 2019. If a Nonprofit Organization does not have audited financial statements or tax returns that include information on non-donation revenues and expenses for fiscal year 2019, it may calculate its compliance with the non-donation revenues test using information available for 2017 and 2018.

F. Application Process

F.1. How can I apply for a Program loan?

To obtain a loan under the Program, an Eligible Borrower must submit an application and any other documentation required by an Eligible Lender to such Eligible Lender. Eligible Borrowers should contact an Eligible Lender for more information on whether the Eligible Lender plans to participate in the Program and to request more information on the application process. For a list of Eligible Lenders that are currently accepting applications from new customers, see here. Updates regarding the Program will be made available on the Board's Main Street page.

F.2. Is a Nonprofit Organization eligible to borrow if it receives a PPP loan or Economic Injury Disaster loan (EIDL)?

A Nonprofit Organization that receives a loan through the SBA's PPP or EIDL program can be an Eligible Borrower under Main Street if it meets the Eligible Borrower criteria.

F.3. Do Eligible Borrowers qualify automatically for a loan under the Program?

No. The Main Street facility term sheets contain requirements that must be satisfied for a loan to be eligible for participation by the Main Street SPV. At the time of the potential borrower's application, an Eligible Lender is expected to assess each borrower's pre-pandemic financial condition and post-pandemic prospects, while also taking into account the payment deferral features in Main Street loans. An Eligible Lender may require additional information and documentation in making this evaluation and will ultimately determine whether an Eligible Borrower is approved for a Program loan in light of these considerations. Nonprofit Organizations that otherwise meet the Eligible Borrower requirements may not be approved for a loan or may not receive the maximum allowable amount.

F.4. Can an Eligible Borrower apply for a Main Street loan through multiple Eligible Lenders?

An Eligible Borrower may submit applications for a Main Street loan to more than one Eligible Lender. However, an Eligible Borrower is required to notify each Eligible Lender to which it submits an application of any other pending or accepted applications. This requirement is reflected in Section 5.E of the Borrower Certifications and Covenants.

If an Eligible Borrower's application for a Main Street loan is declined by an Eligible Lender, the Eligible Borrower may apply through a different Eligible Lender.

G. Terms and Conditions

G.1. How will adjusted 2019 EBIDA be calculated?

See response to E.1 above.

G.2. How will "existing outstanding and undrawn available debt" be calculated?

"Existing outstanding and undrawn available debt" includes all amounts borrowed under any loan facility, including unsecured or secured loans from any bank, non-bank financial institution, or private lender, as well as any publicly issued bonds or private placement facilities, regardless of its position in the borrower's capital structure.[10] It also includes all unused commitments under any loan facility, excluding (1) any undrawn commitment that serves as a backup line for commercial paper issuance, (2) any undrawn commitment that is used to finance receivables (including seasonal financing of inventory),[11] (3) any undrawn commitment that cannot be drawn without additional collateral, and (4) any undrawn commitment that is no longer available due to change in circumstance.[12] Existing outstanding and undrawn available debt should be calculated as of the date of the loan application.

G.3. Why are Program loans based on LIBOR rather than SOFR?

The Federal Reserve received feedback from potential participants that quickly implementing new systems to issue loans based on SOFR would require diverting resources from challenges related to the pandemic. Although financial institutions are transitioning to more robust reference rates, LIBOR remains the most common base rate used in business lending, even though firms cannot rely on LIBOR being published after the end of 2021. Consistent with the recommendations of the Alternative Reference Rates Committee (ARRC), Eligible Lenders and Eligible Borrowers should include fallback contract language to be used should LIBOR become unavailable during the term of the loan. ARRC recommended fallback language can be found at https://www.newyorkfed.org/arrc/fallbacks-contract-language.

[10] For example, subordinated debt and debt with deferred principal and interest payments should be included in the definition of debt and, therefore, covered under this FAQ.
[11] If an undrawn loan facility is used to finance seasonal inventory as well as inventory that is not considered seasonal, then the Eligible Lender should include only the amount of undrawn debt that could be advanced on the Eligible Borrower's non-seasonal inventory as of the date of the loan application.
[12] In addition, as explained in question G.16, PPP loans can be excluded from "existing outstanding and undrawn debt" under certain specified conditions.

G.4. When do I need to start paying interest and principal on my loan?

No payments of principal will be required for the first two years of an NONLF Loan or NOELF Upsized Tranche, and no payments of interest will be required during the first year of an NONLF Loan or NOELF Upsized Tranche. Unpaid interest will be capitalized in accordance with the Eligible Lender's customary practices for capitalizing interest (e.g., at quarter-end or year-end). After the first year interest will be payable in accordance with the loan agreement for the NONLF Loan or NOELF Upsized Tranche.

G.5. How will principal be amortized after the second year?

No principal is paid in the first or second year. The loan will be amortized over the remaining term of the loan, with 15% of principal due at the end of year 3, 15% of principal due at the end of year 4, and a balloon payment of 70% of principal due at maturity at the end of year 5. For purposes of this question, principal includes capitalized interest. Eligible Lenders will provide Eligible Borrowers with payment information during the Program loan origination process.

G.6. Is collateral required for Main Street loans?

NONLF Loans and NOELF Upsized Tranches may be secured or unsecured, although collateral may be required for NOELF Upsized Tranches due to the Eligible Borrower's other loans and debt instruments, as explained further in question D.11.

An NOELF Upsized Tranche must be secured if the underlying loan is secured. In such case, any collateral securing the underlying loan (at the time of upsizing or on any subsequent date) must secure the NOELF Upsized Tranche on a pari passu basis. Under such an arrangement, if the borrower defaults, the SPV and lender(s) would share equally in any collateral available to support the loan relative to their proportional interests in the loan (including the NOELF Upsized Tranche). Eligible Lenders can require Eligible Borrowers to pledge additional collateral to secure an NOELF Upsized Tranche as a condition of approval.

G.7. Are there fees associated with Main Street loans?

Yes, there are fees associated with the NONLF and NOELF.

- NONLF:
  - Transaction Fee: If the initial principal amount of the Eligible Loan is $250,000 or greater, Eligible Lenders will pay the Main Street SPV a transaction fee of 100 basis points of the principal amount of the NONLF at the time of origination, and may pass on this fee to Eligible Borrowers.[13] No transaction fee will be imposed if the initial principal amount of the Eligible Loan is less than $250,000.
  - Loan Origination Fee: If the initial principal amount of the Eligible Loan is $250,000 or greater, the Eligible Borrower will pay the Eligible Lender a fee of up to 100 basis points of the principal amount of the NONLF Loan at the time of origination. If the initial principal amount of the Eligible Loan is less than $250,000, an Eligible Borrower will pay an Eligible Lender an origination fee of up to 200 basis points of the principal amount of the Eligible Loan at the time of origination. Eligible Lenders have discretion over whether and when to charge Eligible Borrowers this fee.
  - Loan Servicing Fee: If the initial principal amount of the Eligible Loan is $250,000 or greater, the SPV will pay an Eligible Lender 25 basis points of the principal amount of its participation per annum for loan servicing. If the initial principal amount of the Eligible Loan is less than $250,000, the SPV will pay an Eligible Lender 50 basis points of the principal amount of its participation in the Eligible Loan per annum for loan servicing. Eligible Lenders should consult the Servicing Agreement for more information.
- NOELF:
  - Transaction Fee: Eligible Lenders will pay the Main Street SPV a transaction fee of 75 basis points of the principal amount of the NOELF Upsized Tranche at the time of upsizing, and may choose to pass on this fee to Eligible Borrowers.
  - Loan Origination Fee: The Eligible Borrower will pay an Eligible Lender a fee of up to 75 basis points of the principal amount of the NOELF Upsized Tranche at the time of upsizing. Eligible Lenders have discretion over whether and when to charge Eligible Borrowers this fee.
  - Loan Servicing Fee: The SPV will pay an Eligible Lender 25 basis points of the principal amount of its participation per annum for loan servicing. Eligible Lenders should consult the Servicing Agreement for more information.

[13] The transaction fee, where applicable, will be based on the principal amount of the NONLF Loan or NOELF Upsized Tranche at the time a loan participation is submitted for sale to the Main Street SPV. Where deferred interest has been capitalized and added to the principal amount and purchase amount, the transaction fee will be based on the principal amount including such capitalized interest. As indicated in question G.4, unpaid interest should be capitalized in accordance with the Eligible Lender's customary practices for capitalizing interest (e.g., at quarter-end or year-end). The Federal Reserve does not expect that interest would be capitalized more frequently than monthly, and thus only expects capitalized interest to affect this calculation where loans were extended at least one month prior to the date upon which the Main Street portal begins accepting submissions of NONLF and NOELF loans for sale of participation interests.

G.8. What constitutes "reasonable efforts" to maintain payroll and retain employees?

Eligible Borrowers should make reasonable efforts to retain employees during the term of the NONLF Loan or NOELF Upsized Tranche. Specifically, an Eligible Borrower should undertake good-faith efforts to maintain payroll and retain employees, in light of its capacities, the economic environment, its available resources, and the need for labor. Borrowers that have already laid off or furloughed workers as a result of the disruptions from COVID-19 are eligible to apply for Main Street loans.

G.9. Can an Eligible Borrower receive more than one Main Street loan?

An Eligible Borrower may only participate in one of the Main Street facilities: the NONLF, the NOELF, the MSNLF, the MSPLF, or the MSELF. However, an Eligible Borrower may receive more than one loan under a single Main Street facility, provided that the sum of NONLF Loans cannot exceed $35 million; and the sum of NOELF Upsized Tranches cannot exceed $300 million.

While Eligible Borrowers are permitted to receive more than one loan from a single Main Street facility, the Main Street SPV will not accept more than one loan made to a single Eligible Borrower by the same Eligible Lender with an initial principal amount of less than $250,000 within 60 days. This restriction is intended to prevent Eligible Lenders from originating multiple loans with an initial principal amount of less than $250,000 to the same Eligible Borrower in order to benefit from the fee structure.

G.10. Can an Eligible Borrower receive a loan if its maximum loan size under a facility's term sheet test is below the minimum loan size for the same facility?

No, borrowers may not receive a loan that is below the minimum loan size, which is $100,000 for NONLF Loans, and $10 million for NOELF Upsized Tranches.

G.11. How can an Eligible Borrower determine if its existing loans had an internal risk rating equivalent to a "pass" in the FFIEC's supervisory rating system on December 31, 2019?

If an otherwise Eligible Borrower applies for a loan at an Eligible Lender with which it has an outstanding loan, the Eligible Lender will make the determination of whether the borrower's existing loans have an internal risk rating that meets the requirements in the Main Street term sheets. The Eligible Lender will also assess the potential borrower's pre-pandemic financial condition and post-pandemic prospects at the time of the application.

G.12. Can a Lender charge a Borrower additional fees above the Main Street origination fee and/or an interest rate above LIBOR + 300 basis points?

Eligible Lenders are allowed to charge Eligible Borrowers a one-time origination fee as set out in the Main Street term sheets. In addition, if a transaction fee is imposed (i.e., if the initial principal amount of the Eligible Loan is $250,000 or greater), Eligible Lenders may also require Eligible Borrowers to pay the transaction fee, which the Eligible Lenders must in turn pay to the Main Street SPV. Eligible Lenders are not permitted to charge Eligible Borrowers any additional fees, except de minimis fees for services that are customary and necessary in the Eligible Lender's underwriting of loans to similar borrowers, such as appraisal and legal fees. Eligible Lenders may also charge customary consent fees if such fees are necessary to amend existing loan documentation in the context of upsizing a loan in connection with the NOELF.[14] Eligible Lenders should not charge servicing fees to Eligible Borrowers.

Main Street loans must have an interest rate of LIBOR (1 month or 3 month) plus 300 basis points.

[14] Customary consent fees may also be charged if the Eligible Borrower's other loans or debt instruments need to be amended in order to facilitate the origination of a new NONLF Loan.

G.13. What methodology should be used to adjust EBIDA if an Eligible Lender has used a range of methods in the past with respect to a single Eligible Borrower or similarly situated borrowers?

An Eligible Lender should require the Eligible Borrower to adjust its 2019 EBIDA by using the methodology that the Eligible Lender has previously required for EBIDA adjustments when extending credit to the Eligible Borrower or, if the Eligible Borrower is a new customer, to similarly situated borrowers on or before June 15, 2020. If an Eligible Lender has used multiple EBIDA adjustment methods with respect to the Eligible Borrower or similarly situated borrowers (e.g., one for use within a credit agreement and one for internal risk management purposes), the Eligible Lender should choose the most conservative method it has employed. In all cases, the Eligible Lender must select a single method used at a point in time in the recent past and before June 15, 2020. The Eligible Lender may not "cherry pick" or apply adjustments used at different points in time or for a range of purposes. The Eligible Lender should document the rationale for its selection of an adjusted EBIDA methodology.

G.14. For purposes of adjusting EBIDA, how does an Eligible Lender identify "similarly situated borrowers"?

Similarly situated borrowers are borrowers in similar sectors with comparable risk and size characteristics. Eligible Lenders should document their process for identifying similarly situated borrowers when they originate an NONLF Loan.

G.15. Why is the Federal Reserve allowing adjustments to EBIDA for purposes of Main Street when it has noted supervisory concerns with these adjustments in the past? Is there a limit to how much EBIDA can be adjusted?

It is normal industry practice for lenders and borrowers to agree to adjust a borrower's EBIDA to accommodate differences in operating models across sectors and to accommodate one-time events that may positively or negatively impact a borrower's earnings. When applied prudently, these adjustments may provide a lender with a more accurate representation of a Nonprofit Organization's earnings capacity over time.

While the Main Street term sheets do not include limits on how much EBIDA can be adjusted, there are important features of the Program that are designed to limit excessive risk-taking. First, EBIDA adjustments must be of the type the Eligible Lender has previously (and recently) required for the Eligible Borrower or similarly situated borrowers. The Eligible Lender should document the rationale for its selection of an adjusted EBIDA methodology. See questions G.13 and G.14 above for more information.

In addition, the requirement that an Eligible Borrower must have a ratio of adjusted EBIDA to unrestricted 2019 operating revenue greater than or equal to 2% should be viewed as a minimum requirement for the Program. Eligible Lenders are expected to conduct an assessment of each potential borrower's pre-pandemic financial condition and post-pandemic prospects at the time of the borrower's application.

Finally, the Program requires that a Main Street loan have an internal risk rating from the Eligible Lender equivalent to a "pass" in the FFIEC's supervisory rating system as of December 31, 2019. Loans that were criticized in the past for excessive adjustments would not be eligible for the Program.

G.16. Do PPP loans count as "outstanding debt" for purposes of Main Street?

When computing "existing outstanding and undrawn available debt" for purposes of the requirement that the Nonprofit Organization at the time of origination of the loan or Upsized Tranche must have 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 55%, Eligible Lenders and Eligible Borrowers may exclude PPP debt, as set out in (A) and (B) below, provided that the Eligible Borrower, together with its affiliates (as defined for purposes of the PPP), received PPP loans with original principal amounts totaling less than $2 million. Under such circumstances, the following may be excluded from the "existing outstanding and undrawn available debt" calculation:

A. If the Eligible Borrower has applied for forgiveness of its PPP loan, the "Forgiveness Amount" as reported by the Eligible Borrower on Line 11 of the SBA's Form 3508, on Line 8 of Form 3508EZ, or on Form 3508S, as applicable, may be excluded, except to the extent the Eligible Borrower's PPP lender or SBA has determined that such amount is ineligible for forgiveness.
B. If the Eligible Borrower has not yet applied for forgiveness of its PPP loan, the amount of its PPP loan that its principal executive officer has a reasonable, good-faith basis to believe will be forgiven in accordance with applicable PPP requirements, after review of the SBA's Form 3508, Form 3508EZ, or Form 3508S, as applicable, including the relevant instructions, may be excluded.

For the avoidance of doubt, an Eligible Borrower that, together with its affiliates (as defined for purposes of the PPP), received PPP loans with original principal amounts totaling $2 million or more, may not exclude any of the outstanding portion of such loans from "existing outstanding and undrawn available debt," except to the extent that the SBA has actually determined that such loans are eligible for forgiveness.

Each Eligible Borrower seeking to exclude some or all of its PPP debt from the calculation of "existing outstanding and undrawn available debt" as provided by this FAQ must, during the Main Street loan underwriting process, provide its Eligible Lender with either (i) a copy of the PPP loan forgiveness application form (SBA Form 3508, 3508EZ, or 3508S) the Eligible Borrower has already completed and submitted to its PPP lender or lender servicing its PPP loan (which may be the same as the Eligible Lender), or (ii) a completed and signed version of the Exclusion of PPP Loan from Main Street "Outstanding Debt" form, as applicable.

If the PPP lender or SBA has determined that all or part of an Eligible Borrower's PPP loan is not forgivable prior to the submission of a Main Street loan to the Main Street Portal, the portion of the PPP loan that the PPP lender or SBA has determined is not forgivable must be included in the "existing outstanding and undrawn available debt" calculation. For the avoidance of doubt, Eligible Lenders and Eligible Borrowers may exclude 100% of the amount of any PPP loan that SBA has determined is eligible for forgiveness.

This framework for excluding an Eligible Borrower's PPP loan from the Main Street "existing outstanding and undrawn available debt" calculation reflects the Federal Reserve's and Treasury's intention to support lending to PPP borrowers that are otherwise eligible to borrow under Main Street, but may not receive the SBA's PPP loan forgiveness decisions by the time of their Main Street loans. It does not reflect any forecast or assessment of the actual expected amount of PPP loan forgiveness for any PPP borrowers.[15]

[15] Certain Businesses that meet the Eligible Borrower requirements may not be approved for a loan or receive the maximum allowable amount. See question I.2.

G.17. How will Eligible Borrower prepayments of a Main Street loan be applied against the principal amount due and future amortization payments?

Prepayment of principal is permitted without penalty and will reduce future payments in the manner specified in the underlying loan documents. While lenders have flexibility in specifying these terms, they should make efforts to align their approach with the expected amortization schedule specified for each loan type. For example, applying prepayments to the next scheduled principal payment due would maintain the alignment of later payments with the amortization schedule and allow for the intended deferment of some portion of payments to later years.

G.18. Can permissible fees charged at the time of origination be included in the principal amount of a Main Street loan?

Yes. As indicated in questions G.7 and G.12, Eligible Lenders may charge certain fees to Eligible Borrowers at the time of origination. Eligible Lenders may include such fees in the principal amount of the Main Street loan, provided that the total Main Street loan amount, including such fees, may not exceed the maximum loan size permitted for the Eligible Borrower under the relevant Main Street facility.

G.19. Are Eligible Lenders allowed to include a LIBOR floor in the interest rate on a Main Street Loan?

NONLF and NOELF must be adjustable-rate five-year term loans with an interest rate of 1-month or 3-month LIBOR plus 300 basis points. LIBOR floors are not permissible.

G.20. [Reserved.]

G.21. Are there any prohibitions on the use of proceeds of a Main Street loan?

The Program is intended to help nonprofit organizations that were in sound financial condition prior to the onset of the COVID-19 pandemic maintain their operations and payroll until conditions normalize. An Eligible Borrower must use the proceeds of a Main Street loan only in furtherance of the Eligible Borrower's tax-exempt purpose as conducted by the Eligible Borrower, its consolidated U.S. subsidiaries, and other affiliates of the Eligible Borrower that are U.S. businesses. Program loans may not be used for:

- with respect to an Eligible Borrower that is a subsidiary of a foreign entity, for the benefit of an Eligible Borrower's foreign affiliates or subsidiaries (see question E.9); or
- to refinance or accelerate payment of existing debt, except under the limited exception for mandatory and due debt and interest payments after the origination of the Main Street loan (see question H.3).

In addition, under the Program an Eligible Borrower may not use any funds (including the proceeds of a Main Street loan) during the term of the loan (and, in some cases, for 12 months after the Main Street loan is repaid) for the follow