Journal Article

The Paycheck Protection Program Liquidity Facility

Abstract: To bolster the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP), the Federal Reserve, with the backing of the Secretary of the Treasury, established the Paycheck Protection Program Liquidity Facility (PPPLF). The facility was intended to supply liquidity to financial institutions participating in the PPP and thereby provide relief to small businesses and help them maintain payroll. In this article, the author lays out the background and rationale for the creation of the facility, covers the salient features of the PPP and the PPPLF, and analyzes the facility’s loan take-up. The findings suggest that the PPPLF played an important role in expanding the supply of credit to smaller banks and nondepository institutions and that these institutions were more likely to originate PPP loans to businesses on the smaller end of the scale.

Keywords: Federal Reserve; Paycheck Protection Program Liquidity Facility; PPP; PPPLF; SBA; CARES Act; Federal Reserve lending facilities;

JEL Classification: G0; G2; G21; G23; G28;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Economic Policy Review

Publication Date: 2022-07-01

Volume: 28

Issue: 1

Note: This volume is a special issue titled “Policy Actions in Response to the COVID-19 Pandemic,” and features ten articles by New York Fed economists and coauthors from Markets, Supervision, the Board of Governors, and the Boston Fed.