Fed extends facility that buys up PPP loans to end of June (will allow others to expire)

The Paycheck Protection Program Liquidity Facility (PPPLF) has been extended to June 30, the Federal Reserve said Monday, while other facilities set up by the agency in response to the coronavirus crisis last year will be allowed to expire at month’s end, as scheduled.

The PPPLF had also been scheduled to expire March 31.

In a release, the Fed said the PPPLF extends term credit to banks, credit unions, and other financial institutions making loans via the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), accepting the loans as collateral. The Fed said the extensions will provide continued support for the flow of credit to small businesses.

The three-month extension, the Fed noted, was approved by Treasury Secretary Janet Yellen.

Meanwhile, the Fed also announced that other facilities set up under its 13(3) authority – which permits Federal Reserve district banks to provide liquidity directly to non-bank, commercial entities, typically in times of crisis – would go out of business March 31. Those are the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, and the Primary Dealer Credit Facility. The Fed said those facilities have not had significant usage since last summer.

Federal Reserve Board announces it will extend its Paycheck Protection Program Liquidity Facility, or PPPLF, by three months to June 30, 2021