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ABA: The American Bankers Association
Compliance News

Fed Creates PPP Lending Facility, Municipal Liquidity Facility

In addition to announcing the Main Street Lending Program, the Fed also provided details on its previously announced Paycheck Protection Program Lending Facility. This highly anticipated action by the Fed “will allow more banks to help more small businesses by providing additional liquidity to the thousands of institutions participating in the Paycheck Protection Program,” Nichols noted.

The Fed will lend to PPP lenders on a non-recourse basis, with Small Business Administration PPP loans as collateral at face value. ABA has updated its FAQs on the PPP to include information about this new facility, as well as additional guidance released by Treasury earlier this week. View the FAQs. Bankers may email any questions not addressed in the FAQ document to [email protected].

The Fed also created a new municipal liquidity facility, through which it will purchase up to $500 billion in notes issued by eligible states, counties and cities. Additionally, the Fed announced that it will broaden the range of assets eligible for purchase by three existing Fed facilities. The Term Asset-Backed Securities Loan Facility, or TALF, will now purchase triple-A-rated tranches of outstanding commercial mortgage-backed securities and newly issued collateralized loan obligations. The Fed expanded the scale of two facilities to support large employers—the Primary Market Corporate Credit Facility and the Secondary Market Corporate Credit Facility—to support up to $850 billion in credit.