Fed to Establish Facility for Financing SBA PPP Loans

In order to facilitate loans being made through the Small Business Administration’s Paycheck Protection Program, the Federal Reserve today said that it will soon create a facility to provide term financing backed by PPP loans. More details will be announced later this week, the Fed said in its brief announcement.

This move—strongly advocated by the American Bankers Association—would provide PPP lenders with liquidity to ensure they can fund the up to $349 billion in PPP loans authorized by Congress in the CARES Act. It addresses one concern expressed by bankers as the PPP launched last week and as it scales up this week.