Federal Reserve Expands Paycheck Protection Program to Add More Lenders
WASHINGTON – The Federal Reserve said Thursday it is expanding a program that helps the government provide stimulus loans to small businesses and is designed to keep workers on payrolls during the coronavirus pandemic.
In a brief statement on its website, the central bank said it broadened access to its Paycheck Protection Program Liquidity Facility to additional lenders such as non-depository institutions.
The Fed also widened the collateral that can be pledged.
“The changes will facilitate lending to small businesses via the Small Business Administration’s Paycheck Protection Program,” the statement said.
The Small Business Administration on Monday relaunched its Paycheck Protection Program, which was intended for small businesses to get loans of up to $10 million that convert to grants if a company uses the proceeds to keep workers employed.
The Paycheck Protection Program is doling out an additional $320 billion approved by Congress, after an initial round of $349 billion was exhausted on April 16 after just 13 days.
As a result of the changes made by the Fed, all Paycheck Protection Program lenders approved by the SBA, including non-depository institution lenders, are now eligible to participate in the central bank’s Paycheck Protection Program Liquidity Facility.
SBA-qualified PPP lenders include banks, credit unions, community development financial institutions, members of the Farm Credit System, small business lending companies licensed by the SBA, and some financial technology firms.
When the Paycheck Protection Program Liquidity Facility was announced, the Federal Reserve said the facility would immediately lend to depository institutions and that non-depository institutions would be added as soon as possible.
Additionally, eligible borrowers will be able to pledge whole PPP loans that they have purchased as collateral to the PPPLF.
An institution that pledges a purchased PPP loan will need to provide the Reserve Bank with documentation from the SBA demonstrating that the pledging institution is the beneficiary of the SBA guarantee for the loan.
The Trump administration on Thursday limited to $20 million the value of loans that corporate groups can get from the program after outrage over reports that large companies and brand-name chains got funds.
It also laid out criteria allowing non-bank lenders to handle loans to ensure “broad and diverse” lender participation.
In The News
BOISE, Idaho – To the outsider, it seems like a movie that has a bizarre twist just as the heroine should be taking her victory lap. Lauren Stein McLean, an entrepreneur who had served on Boise, Idaho’s city council for nearly a decade, and served as... Read More
WASHINGTON (AP) — Democrats are ready to shove a $1.9 trillion COVID-19 relief package through the House on Friday, despite a setback that means a minimum wage boost is unlikely to be in the final version that reaches President Joe Biden.A near party-line vote seemed certain... Read More
WASHINGTON (AP) — The number of Americans seeking unemployment benefits fell sharply last week but remained high by historical standards. Applications for benefits declined 111,000 from the previous week to a seasonally adjusted 730,000, the Labor Department said Thursday. It is the lowest figure since late... Read More
WASHINGTON — Dr. Anthony Fauci says if a coronavirus vaccine is available, regardless of which one, take it. The top U.S. infectious disease expert told NBC on Thursday a third vaccine becoming available “is nothing but good news” and would help control of the pandemic. U.S.... Read More
WASHINGTON (AP) — Republicans rallied solidly against Democrats' proposed $1.9 trillion COVID-19 relief bill as lawmakers awaited a decision by the Senate's parliamentarian that could bolster or potentially kill a pivotal provision hiking the federal minimum wage. Despite their paper-thin congressional majorities, Democratic leaders were poised to push... Read More
Retailers and restaurants are taking control of their future by adapting to evolving consumer behaviors via technology use and operating efficiencies says a new study released from Square Inc. Square’s “Future of Retail” and “Future of Restaurants” reports provide a glimpse into what investments businesses are... Read More