Report on the Paycheck Protection Program Liquidity Facility — June 28, 2021

Record facts

Summary

A report dated June 28, 2021 from the Board of Governors of the Federal Reserve System on the Paycheck Protection Program Liquidity Facility (PPPLF), established under section 13(3) of the Federal Reserve Act (12 U.S.C. § 343). The Board provides it to the public and to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services under its Regulation A. The report describes the Board's approval on June 25, 2021, with the Secretary of the Treasury, of a final extension of the PPPLF from June 30, 2021 until July 30, 2021. It states that some PPP lenders reported continuing liquidity challenges and that some may be unable to pledge PPP loans originated on or before June 30, 2021 without additional time. The report states the facility's terms are otherwise unchanged and cites 12 CFR 201.4(d)(9)(ii).

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Report on the Paycheck Protection Program Liquidity Facility 
June 28, 2021 
 
Overview 
 
The Board of Governors of the Federal Reserve System (Board) is providing 
the following report concerning the Paycheck Protection Program Liquidity 
Facility (PPPLF), which was established by the Board under section 13(3) of the 
Federal Reserve Act (12 U.S.C. § 343).  Pursuant to the Board’s Regulation A,1 the 
Board is required to provide a report to the public and the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the Committee on Financial Services 
of the House of Representatives (the Committees) no later than seven days after 
renewing a program or facility under section 13(3)(C) of the Federal Reserve Act.  
This report describes the Board’s approval, on June 25, 2021, of an extension of 
the termination date of the PPPLF until July 30, 2021.  
 
Paycheck Protection Program Liquidity Facility 
 
On April 8, 2020, the Board authorized each of the 12 Federal Reserve 
Banks to establish and operate the PPPLF.  The PPPLF offers a source of 
liquidity to the financial institution lenders that lend to small businesses through 
the Small Business Administration’s Paycheck Protection Program (PPP).  
Additional information about the PPPLF can be found on the Board’s public 
website at https://www.federalreserve.gov/monetarypolicy/ppplf.htm.  
 
Basis for Extension 
 
On June 25, 2021, the Board and the Secretary of the Treasury approved a 
final extension of the PPPLF from June 30, 2021, until July 30, 2021.  As 
described in the Board’s initial report to the Committees regarding the PPPLF, the 
Board took into consideration the disruptions in financial markets and economic 
activity caused by the COVID-19 pandemic when it initially authorized the 
PPPLF.   Although financial markets have stabilized significantly, some PPP 
lenders have indicated that they continue to face liquidity challenges to support 
PPP lending.  In addition, the PPP Extension Act of 2021 extended the PPP until 
June 30, 2021.  Some PPP lenders may be unable to pledge PPP loans originated 
on or before June 30, 2021, to the PPPLF due to the time required to disburse those 
PPP loans before they could be pledged to the PPPLF.  An extension of the PPPLF 
 
1  12 CFR part 201. 

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thus facilitates PPP lending that will be originated through the expiration of the 
PPP program on June 30, 2021, by providing lenders necessary additional time to 
disburse and pledge to the PPPLF PPP loans originated on or before June 30, 2021. 
 
The Board’s Regulation A provides that an emergency lending facility may 
be renewed if the Board finds that unusual and exigent circumstances continue to 
exist and the facility continues to appropriately provide liquidity to the financial 
system.2  On June 25, 2021, based on the funding challenges for certain lenders 
and the processing delays described above, the Board extended the termination 
date for the PPPLF a final time until July 30, 2021.  The terms of the PPPLF are 
otherwise unchanged as result of this action. 
 
2  12 CFR 201.4(d)(9)(ii).

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