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The Fed extended the paycheck protection program’s liquidity facility through June 30th.
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The facility allows banks to continue to pledge loans made through the PPP to small businesses.
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The PPP itself, which was part of last March’s stimulus, expires on March 31st.
Before its expiration date on March 31, the Federal Reserve Board announced on Monday that it is extending the Paycheck Protection Program (PPP) liquidity facility to the end of June to allow the continued distribution of funds through the PPP to small businesses.
The PPP was implemented under the CARES Act in March, and while it was supposed to support small businesses with 500 or fewer employees, a number of relatively large businesses – including fast-casual chains Shake shack – Received millions in PPP loans, repaid later.
While the PPP itself expires on March 31st, the Fed’s liquidity facility will allow banks to continue to pledge loans through the PPP as collateral to the central bank through June 30th. This will help small businesses get help as banks will not have to worry about taking the risks associated with lending yourself.
According to a data sheet, all lenders eligible to provide PPP loans are eligible to borrow under the Liquidity Facility.
Biden changes done on February 22nd to the PPP to try and target it more closely to the smallest businesses, including a two-week period during which only the smallest businesses were eligible to apply for the program. The President’s $ 1.9 trillion stimulus package, the passed Senate on Saturday and can go into law this week, inclusive $ 50 billion for helping small businesses, with $ 7.25 billion for PPP and $ 25 billion for restaurants. The stimulus PPP funds can be used until the program expires in late March.
“Getting our economy back means bringing back our small businesses,” said Biden called at a press conference on February 22nd. “And we will do that.”
The PPP liquidity facility was previously extended during the Trump administration. The then Treasury Secretary Steve Mnuchin requested to extend the facilities for another 90 days in November as they were due to expire at the end of December.
The facility was launched last year to help small businesses get relief during COVID-19, along with three other facilities, the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, and the Primary Dealer Credit Facility. The Fed said these will expire on March 31, as expected, as they have not had “significant use” since last summer.
Read the original article on Business Insider
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