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Fed expands PPPLF to non-depository lenders
The Federal Reserve last week expanded access to its Paycheck Protection Program Liquidity Facility (PPPLF) to non-depository lenders, and announced that the PPPLF will accept purchased paycheck protection program (PPP) loans as collateral.
Currently, Small Business Administration (SBA) qualified lenders include banks, credit unions, community development financial institutions, members of the Farm Credit System, SBA-licensed small business lending companies, and some fintech companies.
Under the new terms, financial institutions that pledge a purchased PPP loan will need to provide documentation from the SBA demonstrating that the institution is the beneficiary of the guarantee for the loan. View the term sheet.
Earlier this month, the NCUA Board approved an interim final rule determining that PPP loans will receive a zero percent risk weighting under the NCUA's risk based net worth requirement if the loan is pledged as collateral as part of the Fed's PPPLF. NAFCU outlined what credit unions should know regarding the rule in a Final Regulation Alert.
NAFCU has remained in close communication with member credit unions participating in the PPP to ensure they are able to access the funds to provide to small businesses in their communities.
The association will also continue advocating for more guidance and resources for the PPP, especially as it relates to loan forgiveness and future funding. Learn more about recent PPP developments, and access the association's recently updated PPP FAQs for more information.