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Where Have the Paycheck Protection Loans Gone So Far?
The Paycheck Protection Program (PPP) is a central piece of the CARES Act. In the program’s first round, $349 billion in forgivable government-guaranteed loans were extended to small businesses to cover costs related to payroll and utilities, as well as mortgage and rent payments. The program opened for applications on April 3 and was oversubscribed by April 16. Because of its popularity, lawmakers passed a new bill replenishing the fund with another $310 billion and the Small Business Administration (SBA) started approving loans again on April 27. With a new round of PPP lending underway, ...
The Paycheck Protection Program Liquidity Facility (PPPLF)
On April 9, 2020, the Federal Reserve announced that it would take additional actions to provide up to $2.3 trillion in loans to support the economy in response to the COVID-19 crisis. Among the measures taken was the establishment of a new facility intended to facilitate lending to small businesses via the Small Business Administration's Paycheck Protection Program (PPP). Under the Paycheck Protection Program Liquidity Facility (PPPLF), Federal Reserve Banks are authorized to supply liquidity to financial institutions participating in the PPP in the form of term financing on a non-recourse ...
PPP Raised Community Bank Revenue but Lowered Profitability
Community banks have played an outsized role in the Paycheck Protection Program (PPP), disbursing 37 percent of all PPP loans despite holding only 18 percent of outstanding bank loans. Although participation boosted community banks’ revenue by supporting asset and interest income growth, it appears to have lowered their profitability, at least initially: low interest rates and deferred fee collection on PPP loans reduced banks’ earning margins.