Late yesterday afternoon, the Federal Reserve Board (Board) announced that it will soon expand access to its Paycheck Protection Program Liquidity Facility (PPPLF) to include additional Small Business Administration (SBA) qualified lenders.
The Paycheck Protection Program (PPP) is an SBA program intended to provide small businesses affected by the COVID-19 pandemic with $349 billion in forgivable loans (plus an additional $320 billion in a bill currently awaiting the president's signature). The SBA guarantees loans that are made by qualified lenders, which include banks and credit unions, as well as uninsured nondepository lenders.
The PPP is a primary component of the CARES Act, and Congress's goal was to be able to disburse the funds as quickly as possible. As discussed here, the Board's PPPLF allows depository institutions to pledge PPP loans as collateral for credit received from the Reserve Banks. This, in turn, provides the lenders with liquidity, allowing them to more quickly make additional PPP loans.
The PPPLF, however, is currently available only to depository institutions. When the Board first announced the PPPLF, it said it was working to expand access to nondepository lenders. The Board's press release advises that additional details on the expanded eligibility will be announced shortly.
We will advise on how other lenders can access the PPPLF once the Board moves forward.