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Home Source documents Paycheck Protection Program Liquidity Facility (PPPLF) Historical List of Frequently Asked Questions (As of July 30, 2021)

Paycheck Protection Program Liquidity Facility (PPPLF) Historical List of Frequently Asked Questions (As of July 30, 2021)

Summary

The Federal Reserve’s historical list of frequently asked questions about the Paycheck Protection Program Liquidity Facility (PPPLF), as of July 30, 2021, explains that the facility, created under section 13(3) of the Federal Reserve Act, made non-recourse loans to PPP lenders and took their PPP loans as collateral at face value. It urged participants to request advances by July 23, 2021 to receive them before the facility’s July 30, 2021 termination date. Under the PPP Flexibility Act, PPP loans made on or after June 5, 2020 have a five-year maturity, and PPPLF advances match the maturity of the pledged loans. Later answers, through question 66, cover capital treatment and an interim final rule of May 5, 2020 that neutralizes the liquidity coverage ratio effects of using the facility.

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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


1. Why did the Federal Reserve establish the PPPLF?
        The Federal Reserve established the Paycheck Protection Program Liquidity Facility, or
        PPPLF, under section 13(3) of the Federal Reserve Act to bolster the effectiveness of the
        Small Business Administration's Paycheck Protection Program (“PPP”), which provides
        relief to American workers and businesses. Under the PPPLF, the Federal Reserve will
        supply liquidity to participating financial institutions through term financing backed by PPP
        loans.

2. How will the PPPLF work?
        To facilitate the extension of PPP loans to small businesses and other eligible borrowers
        (“PPP borrowers”), the Federal Reserve will provide non-recourse loans to all lenders that
        are eligible to originate PPP loans (”PPP lenders”). PPP lenders that obtain PPPLF
        extensions of credit will pledge the PPP loans as collateral to the Federal Reserve to secure
        the PPPLF extensions of credit. The PPPLF will take the PPP loans as collateral at face
        value.

3. By when should participants request a PPPLF advance of credit to receive it on or before the
   termination date of the facility on July 30, 2021?
        In periods of high demand for PPPLF advances, additional time may be needed to process
        requests for advances. To minimize the potential that processing time may prevent a
        participant from receiving a PPPLF advance of credit by the July 30, 2021, termination date
        of the facility, the Federal Reserve strongly encourages participants that plan to request an
        extension of credit from the PPPLF to submit the required borrowing documentation and
        make advance requests by July 23, 2021. Institutions that have not yet submitted the PPPLF
        Letter of Agreement as amended January 14, 2021, and the Borrower Certification should
        submit all necessary documentation in advance of July 23, 2021.
        All PPPLF documentation, including the PPPLF Letter of Agreement and Borrower
        certification, is available on the Discount Window website. (Added 7/9/2021)

4. How do amendments to the PPP enacted by the Paycheck Protection Program Flexibility Act of
   2020 (the PPP Flexibility Act) affect the PPPLF?
        The PPP Flexibility Act amends several provisions of the PPP under the CARES Act,
        including an extension of the maturity of a PPP loan and an extension of the forgiveness
        period. Under the PPP Flexibility Act, the maturity of PPP loans made on or after June 5,
        2020, is now five years instead of two. A PPP lender and a PPP borrower also may
        mutually agree to extend the maturity of an existing PPP loan from two to five years.
        As described in the PPPLF term sheet, the maturity of an extension of credit under the
        PPPLF will equal the maturity of the PPP loan pledged to secure the extension of credit.
        Accordingly, PPPLF advances may have a 5-year maturity when secured by a pledge of PPP
        loans also with a 5-year maturity.
        Additional instructions for reporting requirements for pledged PPP loans with modified
        maturities are available on the PPPLF website. (Updated 9/25/2020)
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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


5. If a PPP lender and PPP borrower agree to extend the maturity of an existing PPP loan that is
   pledged to the PPPLF from two years to five years, must the PPPLF participant report the new
   maturity date to the Reserve Bank?
        Yes. The maturity date of a PPPLF advance must match the maturity date of the PPP loans
        pledged to secure the advance. Once the maturity date of a PPP loan that is pledged to the
        PPPLF is modified from two years to five years, that PPP loan is no longer eligible as
        collateral for the original two-year PPPLF advance. PPPLF participants that modify the
        maturity of PPP loans pledged to the Reserve Bank must therefore report such modifications
        to the lending Reserve Bank.
        When a PPPLF participant modifies the maturity of a PPP loan from two to five years, the
        participant must either (i) withdraw the modified PPP loan from its collateral pool, or (ii)
        move the modified PPP loan into a new collateral pool to secure a PPPLF advance with the
        same maturity as the modified PPP loan. In both cases, the PPPLF participant must pay
        down the portion of the original PPPLF advance secured by the modified PPP loan (plus
        accrued interest). Additional instructions for reporting modified PPP loans to a lending
        Reserve Bank are available on the PPPLF website.
        A participant also may obtain more information about modifying the maturity of a PPPLF
        advance secured by a modified PPP loan by contacting the participant’s lending Reserve
        Bank. (Added 9/25/2020)

6. How do amendments to the PPP enacted by the Economic Aid to Hard-Hit Small Businesses,
   Nonprofits, and Venues Act affect the PPPLF?
        The PPPLF will continue to be available to eligible participants that pledge any SBA-
        guaranteed PPP Loans that they have originated or purchased, which may include second
        draw loans or loans that are increased pursuant to the Economic Aid to Hard-Hit Small
        Businesses, Nonprofits, and Venues Act. All PPP loans pledged to the PPPLF must meet all
        applicable SBA and PPPLF requirements. The SBA determines what types of entities are
        eligible to participate in the PPP. The PPPLF program website contains all of the
        documents and requirements for participation in the PPPLF.
        Additional information related to the Economic Aid to Hard-Hit Small Businesses,
        Nonprofits, and Venues Act will be published on the PPPLF page on FRB Discount
        window.org. (Added 1/7/2021)

7. Does the PPPLF lend directly to small businesses that are eligible borrowers under the PPP?
        No.

8. How is the PPPLF different from the PPP?
        The PPP is the program administered by the Small Business Administration (SBA), under
        which PPP lenders make loans to eligible small businesses and the SBA guarantees the
        payment of principal and interest on those loans. The PPPLF is a facility established by the
        Federal Reserve to provide support for the PPP program by making non-recourse loans to
        PPP lenders secured by PPP loans.
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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


9. How is the PPPLF different from primary credit, the main discount window lending program
   for depository institutions?
        The PPPLF differs from primary credit lending to depository institutions in a number of
        ways. The primary credit program accepts a wide range of collateral—including PPP
        Loans—but the PPPLF only accepts PPP loans as collateral. The primary credit program is
        open only to depository institutions, while the PPPLF is open to all eligible PPP lenders,
        both depository and non-depository institutions. In addition, primary credit loans are made
        with full recourse to the borrowing institution, while extensions of credit under the PPPLF
        are non-recourse. PPPLF extensions of credit are extended at a slightly higher rate than
        primary credit loans (a fixed rate of 35 basis points rather than the current primary credit
        rate of 25 basis points), are for a longer term (PPPLF loans are for two or five years while
        primary credit is available for up to 90 days), and the amount of the PPPLF extension of
        credit is determined based on the principal amount of the underlying PPP loan. For
        additional information on the primary credit facility, visit:
        https://www.frbdiscountwindow.org. (Updated 6/8/2020)

10. How long will the PPPLF be in effect?
        No new extensions of credit will be made under the PPPLF after July 30, 2021. (Updated
        6/25/2021)

11. Who is eligible to participate in the PPPLF?
        SBA-qualified PPP lenders—both depository institutions and non-depository institutions—
        are eligible to borrow under the PPPLF. Before borrowing under the PPPLF, all eligible
        participants must complete the necessary documentation.

12. How does a PPP lender sign up to participate in PPPLF?
        In order to obtain an extension of credit under the PPPLF, participants must complete the
        necessary documentation, which varies by type of PPPLF participant.
        Depository institutions: Depository institutions must execute the PPPLF Letter of
        Agreement and a certification specific to section 13(3) facilities. In addition, depository
        institutions that have not already established access to the discount window must deliver
        certified copies of the Authorizing Resolutions for Borrowers in the applicable form
        attached to the Federal Reserve Bank’s Operating Circular No. 10 (OC 10).
         Depository institutions are not required to establish ongoing access to the discount window
        to participate in the PPPLF. However, if a depository institution desires to establish
        ongoing access to the discount window in addition to participating in the PPPLF, it must
        submit the standard documents required by OC 10: a Letter of Agreement and a Certificate
        attaching copies of the institution’s organizational documents. Please refer to the
        appendices to OC 10.
        Non-depository institutions: Non-depository institutions must execute the PPPLF Letter
        of Agreement for Non-Depository Institutions and a certification specific to section 13(3)
        facilities. Non-depository institutions will agree to the terms of Federal Reserve Bank
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    Paycheck Protection Program Liquidity Facility (PPPLF)
    Historical List of Frequently Asked Questions
    As of July 30, 2021


            Operating Circular No 10 (Lending) by executing the PPPLF Letter of Agreement for
            Non-Depository Institutions. As part of the PPPLF Letter of Agreement, there is a section
            for non-depository institutions to identify the depository institution that will act as their
            correspondent (a depository institution whose account will be debited and credited for
            PPPLF-related payments to and from the non-depository institution borrower). The
            depository institution identified as the correspondent must have a master account at a
            Reserve Bank into which the proceeds of PPPLF extensions of credit are credited and from
            which they are repaid. (The master account may be at any Reserve Bank.) Non-depository
            institutions must also deliver certified copies of the Authorizing Resolutions for
            Borrowers. The set-up process for non-depository institutions can take up to 24 hours.

    13. How does a PPPLF participant determine which Reserve Bank is the appropriate Reserve Bank
        for participating in the PPPLF?
            Depository institutions:
            For depository institutions, the appropriate Reserve Bank is the Reserve Bank in whose
            District it is located. See Regulation D, 12 CFR 204.3(g)(1)–(2), for information on
            determining the District in which the depository institution is located.
           Non-depository institutions: For non-depository institutions, the appropriate Reserve Bank
           is as follows:
          Participant Entity Type              Reserve Bank           Email Address & Telephone
•    Non-bank Community Development             Federal Reserve         Email:
     Financial Institution (CDFI) - certified   Bank of Cleveland       CLEV.ppplfcredit@clev.frb.org
     by the U.S. Department of the                                      Telephone: (888) 719-4636
     Treasury
•    Small Business Lending Company             Federal Reserve         Email:
     (SBLC) - licensed and regulated by         Bank of                 mpls.credit@mpls.frb.org
     the Small Business Administration          Minneapolis             Telephone: (877) 837-8815
•    Agricultural Credit Association
     (ACA) -member of the Farm Credit
     System
•    Other; none of the above apply to my       Federal Reserve         Email: ppplfcredit@sf.frb.org
     institution                                Bank of San             Telephone: (866) 974-7475
                                                Francisco

    14. Can a PPPLF participant make revisions to the PPPLF letter of agreement certification, or
        borrowing resolution documents?
            No.

    15. How does a PPPLF participant pledge collateral and request an advance under the PPPLF?


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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


        A PPPLF participant must assemble all PPP loans that it intends to pledge as PPPLF
        collateral into separate pools grouped by maturity date. For each such pool, the PPPLF
        participant must prepare an Advance Request form, that
               i. lists the total value of the PPP loans being pledged as PPPLF collateral;
              ii. contains several important certifications that the PPPLF participant must make;
                  and
             iii. contains the loan request for the total value of the PPP loans being submitted as
                  collateral.
       The Advance Request form includes a “PPP loan listing Section” that requires the following
       data elements for each individual PPP loan pledged to the pool:
              • The obligation or loan number in the PPPLF borrower’s loan system
              • The SBA loan number assigned by the SBA
              • The PPP borrower’s name “Small Business Borrower Name”
              • The original par amount of the PPP loan
              • The current outstanding balance of the PPP loan (During the period of deferred
                 PPP loan payment, current outstanding balance should equal original par)
              • The maturity date of the PPP loan (All of the listed loans must have the same
                 maturity date)
              • The interest next due date (During the period of deferred PPP loan payment, may
                 be blank)
              • The principal next due date (During the period of deferred PPP loan payment, may
                 be blank)
       The Advance Request must be submitted by an individual identified in the PPPLF Letter of
       Agreement amended January 14, 2021, as authorized to request PPPLF extensions of credit
       and pledge PPPLF collateral. Submit the completed collateral forms to your appropriate
       Federal Reserve Bank.
       A separate Advance Request must be submitted in a separate email for each request for a
       PPPLF extension of credit and pool of PPPLF collateral. (Amended 1/25/2021)

16. Does a PPP lender have to have a master account at a Federal Reserve Bank in order to borrow
    under the PPPLF?
        No. However, a PPP lender that does not have a master account must establish a
        correspondent relationship with a depository institution that does have a master account with
        a Reserve Bank (the master account may be with any Reserve Bank and does not have to be
        a master account with the lending Reserve Bank). PPPLF participants that do not already
        have an established correspondent relationship must designate the depository institution that
        will serve as their PPPLF correspondent in the PPPLF Letter of Agreement.
17. If a depository institution has an existing correspondent relationship for discount window
    purposes, can it establish a separate correspondent relationship to borrow under the PPPLF?

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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


        No. If a depository institution has an existing correspondent relationship for discount
        window purposes, the depository institution must use that same correspondent relationship
        for extensions of credit under the PPPLF.

18. How do institutions that have completed the PPPLF documents initiate an extension of credit
    under the PPPLF?
        PPPLF participants obtain a PPPLF extension of credit by contacting the appropriate
        Reserve Bank.

19. At what rate will credit under the PPPLF be extended?
        PPPLF extensions of credit will be extended at 35 basis points.

20. Is the rate fixed for the life of a PPPLF extension of credit?
        Yes.

21. Are there any fees to participate in the PPPLF?
        No.

22. What will be the maturity of PPPLF extensions of credit?
        The maturity date of an extension of credit under the PPPLF will equal the maturity date of
        the PPP loans pledged to secure the extension of credit (the maturity date of a PPP loan is
        either two or five years from origination of the PPP loan). The maturity date of a PPPLF
        extension of credit will be accelerated under certain conditions. See: the FAQ below, “Can a
        PPPLF participant be required to repay a PPPLF extension of credit prior to the maturity
        date?” In addition, if the PPP loan matures on a Saturday or a Sunday, the PPPLF extension
        of credit secured by that loan will mature on the previous business day. (Updated 6/8/2020)

23. Is there a limit on the total amount of credit that can be extended through the PPPLF?
        No, there is no limit to the amount of credit that can be extended under the PPPLF.

24. Can a PPPLF participant voluntarily prepay an extension of credit under the PPPLF?
        Yes. Voluntary prepayments must be accompanied by withdrawals of PPPLF collateral
        pledged to secure the PPPLF extension of credit. The amount of the prepayment must
        correspond to the total balance of the withdrawn PPP loans that have been pledged as
        PPPLF collateral. Accrued interest will be charged at prepayment, based on the amount of
        prepayment.

25. Can a PPPLF participant be required to repay a PPPLF extension of credit prior to the maturity
    date?
        Yes. A PPPLF participant is required to repay a PPPLF extension of credit when any of the
        following happens:


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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


        •     The PPPLF participant has been reimbursed by the SBA for a loan forgiveness (to the
              extent of the forgiveness);
        •     The PPPLF participant has received payment from the SBA representing exercise of the
              loan guarantee; or
        •     The PPPLF participant has received payment from the PPP borrower of the underlying
              PPP loan (to the extent of the payment received).
        PPPLF participants are required to repay PPPLF advances so that the outstanding amount of
        the PPPLF advance matches the updated aggregate collateral balance in the associated
        pledge pool. The amount of a PPPLF advance outstanding must not exceed the aggregate
        amount of the outstanding balances of PPP loans pledged to secure the PPPLF advance.
        Any payments on pledged PPP loans (e.g., forgiveness or guarantee payments from the
        SBA, or payments from the PPP borrower) must be promptly reported to the lending
        Reserve Bank so that the PPPLF advance can be adjusted accordingly. Additional
        information on reporting requirements for payments on PPP loans and on prepayment of
        PPPLF extensions of credit is available on the PPPLF website. (Updated 9/16/2020)

26. Are there any penalties associated with prepayment of a PPPLF loan?
        No.

27. Will Reserve Banks accept PPP loans that have imaged or electronic rather than “wet ink”
    signatures as collateral to the PPPLF? If so, what types of electronic signatures are acceptable?
        Yes. The Reserve Banks expect that most, if not all, PPP loans will have electronic
        signatures, given the conditions in which the lending is occurring. Reserve Banks will
        accept PPP loans with electronic signatures (i.e., loans that are electronically originated or
        loans that have electronic copies of “wet ink” signatures, such as faxed or scanned copies of
        “wet ink” signed documents).

28. Will Reserve Banks accept a letter of agreement and certification for the PPPLF that have
    imaged or electronic rather than “wet ink” signatures? If so, what types of electronic signatures
    are acceptable? (duplicate)
        Yes. Reserve Banks will accept PPPLF documents with electronic signatures (i.e., images
        that are electronic copies of “wet ink” signatures, such as faxed or scanned copies of “wet
        ink” signed documents, or electronic signatures with a digital date and time stamp). PPPLF
        participants should direct any further questions regarding imaged or electronic signatures to
        discount window staff at the appropriate Reserve Bank.

29. How are PPP loans that are pledged as collateral to the PPPLF valued?
        PPP loans pledged as collateral to secure extensions of credit under the PPPLF will be
        valued at the principal amount of the PPP loan.

30. Will the Federal Reserve disclose information about the PPPLF?

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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


        Yes. The Federal Reserve will publicly disclose information regarding the PPPLF during
        the operation of the facility, including information regarding participants, amounts
        borrowed, value of pledged collateral, overall costs and revenues, and other
        information. Please see the Board’s May 12, 2020 press release for further information on
        the disclosures.
        Balance sheet items related to the PPPLF, including PPPLF credit extended, are reported
        weekly on an aggregated basis on the Board’s H.4.1 statistical release, “Factors Affecting
        Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve
        Banks.”
        In addition, the Federal Reserve will disclose to Congress information as required by
        Section 13(3) of the Federal Reserve Act and the Board’s Regulation A.

31. PPPLF participants are required to certify that they are not insolvent and that they cannot obtain
    adequate credit accommodations from other banking institutions. Upon what information may
    PPPLF participants rely when making these certifications?
        Not Insolvent:
        For a PPPLF participant to comply with the requirement for certifying that it is not
        insolvent, the PPPLF participant may certify that it is not (1) in bankruptcy, resolution under
        Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or any other
        Federal or State insolvency proceeding, and that it is not (2) generally failing to pay
        undisputed debts as they become due during the 90 days preceding the date of borrowing
        under the PPPLF. This certification of non-insolvency is required under section 13(3) of the
        Federal Reserve Act and the Board’s Regulation A, which is the authority under which the
        PPPLF was authorized.
        Lack of Adequate Credit Accommodations:
        For a PPPLF participant to comply with the requirement for certifying that it lacks adequate
        credit accommodations from other banking institutions, the PPPLF participant may rely on
        current economic or market conditions, including conditions related to the availability and
        price of credit available to small businesses in light of the COVID-19 pandemic. A PPPLF
        participant is not required to certify that credit is unavailable. Rather, the PPPLF participant
        can rely on the fact that credit is not available at prices or on conditions that are consistent
        with the purposes of the PPPLF or with normal market conditions. In particular, a PPPLF
        participant may rely on the fact that the Board of Governors authorized the establishment of
        the PPPLF to improve the ability of PPP lenders to obtain reasonably priced long-term
        financing for PPP Loans. A PPPLF participant may also rely on aspects of the PPPLF
        program to determine that funding from the PPPLF is more “adequate,” including, for
        example, beneficial capital treatment for PPP loans pledged to the PPPLF.

32. May a PPPLF participant pledge a PPP loan as PPPLF collateral that the PPPLF participant has
    already pledged to another party?



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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


        No, a PPPLF participant may not pledge any PPP loan as PPPLF collateral that has been
        pledged to another party without obtaining the consent of the lending Reserve Bank.

33. May a PPPLF participant pledge a PPP loan as PPPLF collateral if the participant funded the
    PPP loan using secured funding from a warehouse lender?
        No. A participant may only pledge a PPP loan to the PPPLF if there are no other claims on
        that loan.

34. Are extensions of credit under the PPPLF made with recourse to the PPPLF participant?
        No. Extensions of credit under the PPPLF are made without recourse to the PPPLF
        participant. The non-recourse status of the PPPLF extension of credit may change,
        however, if the PPPLF participant has breached any of the representations, warranties, or
        covenants in the PPPLF documentation; or has engaged in fraud or made a
        misrepresentation in connection with participation in the PPPLF.

35. May a PPPLF participant pledge a PPP loan that the borrower purchased from another PPP
    lender as collateral for an extension of credit under the PPPLF?
        Yes. Effective May 1, 2020, an eligible borrower may pledge PPP loans purchased from
        other lenders to the PPPLF. PPP loans must be purchased in accordance with the SBA’s
        requirements for the sale and purchase of whole PPP loans.

36. If a PPPLF participant participated in the PPPLF prior to January 14, 2021, and wishes to
    pledge PPP collateral that the PPPLF participant has either originated or purchased, must the
    PPPLF participant sign a new PPPLF Letter of Agreement?
        Yes. Any PPPLF participant that plans to request a new advance under the PPPLF on or
        after January 14, 2021, must execute the amended Letter of Agreement, as amended January
        14, 2021 (Amended Letter of Agreement). PPPLF participants that are depository
        institutions must execute the amended Letter of Agreement (Amended Letter of Agreement)
        for depository institutions, and PPPLF participants that are non-depository institutions must
        execute the amended Letter of Agreement (Amended Letter of Agreement) for non-
        depository institutions. (Added 1/25/2021)

37. Must a PPPLF participant submit any documentation from the SBA in order to pledge PPP
    loans that the PPPLF participant has purchased to the PPPLF?
        Yes. An institution that pledges purchased PPP loans to the PPPLF must provide the
        Reserve Bank with copies of the SBA’s “Acknowledgement of PPP Whole Loan Sale” letter
        and the accompanying loan list identifying each of the PPP loans sold by SBA loan
        number. If the institution is pledging purchased PPP loans that were purchased in more than
        one purchase and sale transaction, the pledging institution must submit copies of the SBA
        Acknowledgement of PPP Whole Loan Sale letters and the accompanying loan lists
        identifying each of the PPP loans sold by SBA loan number for all purchased PPP loans
        being pledged.


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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


38. Is a PPPLF participant required to amend the SBA loan list identifying each of the PPP loans
    sold by SBA loan number if the PPPLF participant is not pledging all of the PPP loans listed in
    that loan list?
        No, a PPPLF participant is not required to amend the purchased loan listings provided by
        the SBA to remove loans that are not being pledged to the PPPLF. A PPPLF participant
        pledge is defined by the PPP loans listed in the PPPLF individual loan listing, which is a
        separate document filled out and submitted by the PPPLF participant. Depository
        institutions should use the individual loan reporting table for depository institutions. Non-
        depository institutions should use the individual loan reporting table for non-depository
        institutions.

39. May a participant under the PPPLF pledge PPP loans with the same maturity date for different
    PPPLF extensions of credit?
        With one exception discussed below, no. A Reserve Bank will make a single extension of
        credit to a PPPLF participant secured by all PPP loans submitted that mature on a single
        date. For example, a PPPLF participant may have a group of PPP loans that all have a
        maturity date of May 20, 2022. The Reserve Bank will make one extension of credit to that
        PPPLF participant secured by the pool of PPP loans having the May 20, 2022, maturity
        date. For this reason, a PPPLF participant should ensure that it simultaneously pledges all
        PPP loans with the same maturity date, including both own-originated and loans purchased
        from other PPP lenders in accordance with the SBA’s requirements for the sale and
        purchase of whole PPP loans. A PPPLF participant will be required to obtain a separate
        extension of PPPLF credit for each maturity date of PPP loans that are pledged as
        collateral. The amount of the PPPLF extension of credit will be the aggregate amount of the
        PPP loans that are pledged to secure that extension of credit, and the maturity date of the
        PPPLF extension of credit will be the maturity date of the PPP loans that are pledged to
        secure it.
        Exception: If a PPPLF participant already has an outstanding PPPLF advance secured by
        PPP loans with a maturity date prior to May 15, 2022, and subsequently wishes to pledge
        purchased PPP loans with that same maturity date, Reserve Banks will allow a single
        additional PPPLF advance secured by the purchased loans that have the same maturity date
        as an outstanding PPPLF advance. (Updated 5/20/2020)

40. How soon after submission of the PPPLF request for an extension of credit will the proceeds of
    the PPPLF extension of credit be available to the PPPLF participant?
        Proceeds of a PPPLF extension of credit will generally be available on the business day
        following the date of the submission of the request. In periods of very high demand for
        PPPLF extensions of credit, such as is expected at the start of the facility, additional time
        may be needed for proceeds to be available to the PPPLF participant.

41. Can a PPPLF participant obtain an extension of credit under the PPPLF before it originates the
    PPP loan that secures it?


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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


        No. A PPPLF participant must first make the PPP loan that it intends to pledge as PPPLF
        collateral, and then submit a request for a PPPLF extension of credit secured by that PPP
        loan.

42. Can a PPPLF participant pledge PPP loans as PPPLF collateral for an extension of PPPLF
    credit in an amount that is less than the aggregate principal amount of the PPP loans that have
    been pledged?
        No. PPPLF credit will be extended in the amount equal to the aggregate principal amount
        of the PPP loans that have been pledged.

43. Can a PPPLF participant pledge PPP loans to the PPPLF for the purpose of requesting an
    extension of credit at a later date?
        No.

44. Are depository institutions that are eligible for secondary credit eligible to participate in the
    PPPLF?
        Yes.

45. What should a PPPLF participant do if it has pledged a PPP loan as collateral for a PPPLF
    extension of credit, but later decides that it wants to sell that PPP loan?
        PPP loans that are pledged as PPPLF collateral must be withdrawn from the PPPLF before
        they are sold. Before the loan sale takes place, the PPPLF participant must both notify the
        lending Reserve Bank that it is requesting to prepay a PPPLF extension of credit, and must
        pay the lending Reserve Bank the full amount of the outstanding balance of the PPP loan
        that the PPPLF participant wishes to withdraw as collateral. The PPPLF participant should
        contact its lending Reserve Bank for information on submitting its request and on
        completing any necessary documentation.

46. Are there any restrictions on what a PPPLF participant does with the proceeds of a PPPLF
    extension of credit?
        No. The PPPLF provides liquidity against PPP loan collateral to bolster the effectiveness of
        the PPP. There are no restrictions on what an institution does with the proceeds of a PPPLF
        advance.

47. Do PPP lenders have to a use a promissory note provided by the SBA or may they use their
    own?
        PPP lenders may use their own promissory note or an SBA form of promissory note. See the
        SBA’s Frequently Asked Questions for Lenders and Borrowers for the Paycheck Protection
        Program at: https://www.sba.gov/document/support--faq-lenders-borrowers (Question: Do
        lenders have to use a promissory note provided by the SBA or may they use their own?")

48. Where should questions regarding the PPPLF be directed?


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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


        For depository institutions, questions regarding the PPPLF should be directed to the
        institution’s local Reserve Bank or to PPPLF@chi.frb.org.
        For non-depository institutions, questions regarding the PPPLF should be directed as
        follows:
              Participant Entity Type               Reserve Bank     Email Address & Telephone
          •     Non-bank Community               Federal Reserve     Email:
                Development Financial            Bank of Cleveland   CLEV.ppplfcredit@clev.frb.org
                Institution (CDFI) - certified
                                                                     Telephone: (888) 719-4636
                by the U.S. Department of
                the Treasury
          •     Small Business Lending           Federal Reserve     Email:
                Company (SBLC) - licensed        Bank of             mpls.credit@mpls.frb.org
                and regulated by the Small       Minneapolis         Telephone: (877) 837-8815
                Business Administration
          •     Agricultural Credit
                Association (ACA) -member
                of the Farm Credit System
          •     Other; none of the above         Federal Reserve     Email: ppplfcredit@sf.frb.org
                apply to my institution          Bank of San         Telephone: (866) 974-7475
                                                 Francisco


49. Where is there more information about the PPP?
        To learn more about the PPP, visit https://home.treasury.gov/policy-issues/top-
        priorities/cares-act/assistance-for-small-businesses.

50. When will interest on PPPLF advances accrue? When must a PPPLF participant pay accrued
    interest on a PPPLF advance?
        Interest on a PPPLF advance accrues daily beginning when the PPPLF advance is credited
        to the PPPLF participant’s designated account at a Reserve Bank. Interest accrues daily
        until the PPPLF advance is fully repaid. PPPLF participants must pay all accrued and
        unpaid interest at the time of payoff. In addition, a PPPLF participant must accompany any
        prepayments of any part of a PPPLF advance with payment of accrued and unpaid interest
        attributable to the amount of the prepayment. The prepayments (including payment of the
        accompanying accrued and unpaid interest) will be processed when the PPPLF participant
        reports a change to the Reserve Bank in the balance of the PPP loans pledged to secure the
        PPPLF advance.
        Interest on a PPPLF advance will continue to accrue during any lag between the time that
        the PPPLF participant receives a payment on a PPP loan securing a PPPLF advance and the
        time that the PPPLF participant reports that payment to the Reserve Bank.

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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


51. How is accrued interest on PPPLF advances calculated?
        Interest on PPPLF advances accrues daily from the day the advance is extended. Daily
        interest accruals are calculated on the basis of 365 days in a year, and are rounded to whole
        cents. Interest does not compound, and accrues based only on the outstanding principal
        balance. For example, the daily accrued interest on a PPPLF advance of $1 million is:
        round($ 1,000,000 * (.0035 / 365),2)*1 = $ 9.59. (Added 5/20/2020)

52. Can a PPPLF participant obtain a statement from its lending Reserve Bank setting forth its
    PPPLF activity?
        Yes. A participant’s lending Reserve Bank offers a “Lending Statement for PPPLF
        Participants” (Lending Statement) upon request. The Lending Statement provides
        information on the participant’s aggregate PPPLF advance activity (such as number of
        advances outstanding, total and outstanding advance amounts, accrued unpaid interest, and
        paid interest amounts) and aggregate PPPLF activity that has been paid down (such as paid
        principal amount). In addition, the Lending Statement includes this same information for
        each of the participant’s individual PPPLF advances.
        To request a Lending Statement, an authorized individual must email its lending Reserve
        Bank’s PPPLF mailbox with an email containing “request for lending statement” in the
        subject line. An authorized individual is a person identified in the PPPLF Letter of
        Agreement as authorized to request PPPLF extensions of credit and pledge PPPLF
        collateral. An email requesting a Lending Statement may not include other PPPLF-related
        issues. For example, an email requesting a Lending Statement may not also contain a PPPLF
        pledge or reduction transaction. A participant may request a Lending Statement from its
        lending Reserve Bank not more frequently than once per calendar month. (Added
        5/19/2021)

53. What should PPPLF participants do to prepare for the required prepayments of their PPPLF
    advances?
        PPPLF participants should track all of their PPPLF advances and associated pledge pools of
        PPP loans separately and be prepared to report the updated aggregate current outstanding
        balance of the PPP loans in each pledge pool (reflecting payments on the PPP loans received
        from all sources). PPPLF participants should also be prepared to generate listings of
        original and updated information on individual pledged PPP loans.

54. Must a PPPLF participant report to the Reserve Bank any PPP loan paydown amounts that it
    receives on PPP loans that are pledged to secure a PPPLF advance?
        Yes, a PPPLF participant must submit a Paycheck Protection Program Liquidity Facility
        (PPPLF) Individual PPP Loan Reduction Report (reduction report) indicating the receipt of
        any payments on PPP loans pledged as collateral to the PPPLF immediately upon receipt of
        payment. In addition, a PPPLF participant must begin submitting reduction reports every
        two weeks once the participant has received its first forgiveness reimbursement payment
        from the SBA as described below.

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As of July 30, 2021


        The first regular periodic reduction report is due when the PPPLF participant begins
        receiving forgiveness reimbursement payments from the SBA for, and begins forgiveness
        paydowns on, PPP loans pledged to the PPPLF. Thereafter, the PPPLF participant must
        submit reduction reports at least once every two weeks (or more frequently, if requested by
        the lending Reserve Bank) on any PPP loan pool containing a PPP loan for which the
        PPPLF participant has received a PPP loan paydown from any source. If the PPPLF
        participant has not received a PPP loan paydown on any PPP loan in a given PPP loan pool
        during the reporting period, then the PPPLF participant is not required to submit a PPP loan
        reduction report for that pool. If no PPP loan paydown amounts are received during a
        reporting period on any of the PPPLF participant’s PPP loan pools, the participant must
        notify the Reserve Bank by email that no PPP loan paydown amounts were received during
        the reporting period. (Added 9/16/2020)

55. How does a PPPLF participant prepare and submit a reduction report?
        A PPPLF participant reports PPP loan paydowns that it has received by submitting
        a Paycheck Protection Program Liquidity Facility (PPPLF) Individual PPP Loan Reduction
        Report (reduction report). Effective September 18, 2020, the single reduction report form
        replaces the two forms (Transmittal Form for Reporting Reductions of Outstanding
        Principal Balance of Small Business Administration Paycheck Protection Program Loans
        Pledged to Secure Paycheck Protection Program Liquidity Facility Advances and the
        Paycheck Protection Program Individual Loan Listing Table) that were used starting in May
        2020. The reduction report is used to submit the updated outstanding balance of individual
        PPP loans that are pledged as collateral to the PPPLF upon which payments have been
        received. The reduction report and additional instructions for submitting the reduction
        reports are available on the PPPLF website. (Added 9/16/2020)

56. Starting on September 18, 2020, is a PPPLF participant required to use the single reduction
    report form to report PPP loan paydowns, or may it continue using the May 2020 forms and
    process?
        Starting September 18, 2020, a PPPLF participant must use the version of the Paycheck
        Protection Program Liquidity Facility (PPPLF) Individual PPP Loan Reduction Report
        (reduction report) that is available on the PPPLF website. A PPPLF participant that needs
        some time to transition to the new reduction report should contact its lending Reserve Bank.
        (Added 9/16/2020)

57. Must a PPPLF participant prepare and submit a Paycheck Protection Program Liquidity Facility
    (PPPLF) Individual PPP Loan Reduction Report (reduction report) if the PPPLF participant has
    not received any paydowns on any PPP loans pledged to secure the PPPLF participant’s PPPLF
    advance?
        No, a PPPLF participant is not required to prepare and submit a reduction report on a
        particular PPPLF advance if the PPPLF participant has not received any PPP loan paydowns
        on PPP loans pledged to secure that advance during the reporting period. If the PPPLF
        participant has not received any PPP loan paydown amounts on any of its pledged PPP loan

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Historical List of Frequently Asked Questions
As of July 30, 2021


        pools during the reporting period, the participant must send an email notifying the Reserve
        Bank that no PPP loan paydown amounts were received. (Added 9/16/2020)

58. May a PPPLF participant that has received payments on pledged PPP loans pledge additional
    collateral to secure the PPPLF advance rather than prepay the PPPLF advance?
        No. The revalued pledge pool must include only those PPP loans that were included in the
        original pledge, less any that have been withdrawn or fully paid off. Substitution of PPP
        loans that were not originally pledged is not permitted.

59. The PPPLF letter of agreement requires a participant to warrant, represent, and covenant that
    each PPP loan pledged as collateral “complies with all requirements of the PPP.” Does this
    requirement require the PPPLF participant to guarantee that the PPP loan borrower has
    complied or will comply with all SBA requirements applicable to PPP borrowers?
        The PPPLF letter of agreement is not intended to impose requirements on a PPP lender
        related to its PPP borrower beyond the requirements imposed on PPP lenders by the SBA
        and U.S. Treasury. The SBA’s Interim Final Rule (85 Fed. Reg. 20811, 20815 (Apr. 15,
        2020) states that PPP lenders may rely on certifications of a borrower in order to determine
        eligibility of the PPP borrower and use of PPP loan proceeds, and provides that PPP lenders
        may rely on specified documents provided by the borrower to determine qualifying loan
        amount and eligibility for loan forgiveness. See the SBA’s Interim Final Rule for further
        information.

60. May a PPPLF participant pledge a PPP loan to the PPPLF if the loan does not meet one or more
    requirements of the PPP or of the PPPLF, or if the loan has been cancelled or otherwise not
    guaranteed by the SBA?
        No. Under the terms of the PPPLF, a PPPLF advance can only be secured by PPP loans that
        are guaranteed by the SBA and that satisfy all other conditions of the PPP and of the PPPLF
        (including the PPPLF Term Sheet and the PPPLF Letter of Agreement). A PPP loan that is
        cancelled, awaiting SBA reinstatement, or otherwise not guaranteed by the SBA must be
        removed from the collateral pledge, and the participant must immediately notify its lending
        Reserve Bank of the removal. If the participant can provide documentation establishing that
        the SBA has re-instated the PPP loan, the re-instated PPP loan is fully guaranteed by the
        SBA, and otherwise meets the requirements of the PPPLF and the PPP, then the participant
        may contact its lending Reserve Bank regarding re-pledging the PPP loan.
        The PPPLF makes advances secured by PPP loans that meet the requirements of the PPPLF
        and the PPP, including that the PPP loans are fully guaranteed by the SBA. The SBA
        determines whether a PPP loan satisfies the requirements of the PPP. Questions regarding the
        status of PPP loans for purposes of the PPP, or questions regarding the cancellation of a loan
        or re-instating the SBA guarantee should be directed to the SBA. (Added 12/8/2020)

61. May a PPPLF participant pledge PPP loans with an SBA loan number that was assigned on or
    after June 5, 2021, with a two-year maturity to the PPPLF?


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Paycheck Protection Program Liquidity Facility (PPPLF)
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        No. Under the terms of the PPPLF, a PPPLF advance can only be secured by PPP loans that
        are guaranteed by the SBA and that satisfy all other conditions of the PPP and of the PPPLF.
        Under the Paycheck Protection Program Flexibility Act (Flexibility Act) and SBA rules,
        PPP loans with SBA numbers assigned through June 4, 2020, have a term of two
        years. Section 2(a) of the Flexibility Act amended the CARES Act to provide a minimum
        maturity of five years for all PPP loans made on or after June 5, 2020. (Added 1/25/2021)

62. I removed a PPP loan from the collateral pool supporting a PPPLF advance because I could not
    provide documentation to establish that the loan was guaranteed by the SBA or that the loan
    satisfied some other requirement of the PPP or the PPPLF. If my institution is able to provide
    such documentation at a later time, may my institution re-pledge the loan to the PPPLF?
        Yes, provided that the PPP loan otherwise meets all the requirements of the PPP and the
        PPPLF. A PPPLF participant may re-pledge a PPP loan to the PPPLF once the participant
        is able to provide documentation that establishes that the loan meets the requirements of the
        PPPLF and the PPP, including that the PPP loan is fully guaranteed by the SBA. The
        participant may re-pledge until June 30, 2021, after which time the PPPLF cannot extend
        new advances. This date may be extended by the Board and the Secretary of the Treasury.
        (Updated 3/8/2021)

63. My institution has pledged a PPP loan that currently does not comply with the laws and
    regulations governing the PPP. We intend to make adjustments to the loan so that it complies
    with the laws and regulations governing the PPP program. What should we do while we are
    working to that end?
        Only valid PPP loans may be pledged to the PPPLF. If a PPP loan currently does not
        comply with the laws and regulations governing the PPP, or the PPPLF, the participant must
        notify its lending Reserve Bank immediately and remove the loan from its collateral pool.
        (Added 12/8/2020)

64. For depository institutions, how are PPP loans treated for regulatory capital purposes?
        PPP loans pledged to the PPPLF are excluded from total leverage exposure, average total
        consolidated assets, advanced approaches total risk-weighted assets, and standardized total
        risk-weighted assets, as applicable. On April 9, 2020, the Board, the Office of the
        Comptroller of the Currency, and the Federal Deposit Insurance Corporation issued an
        interim final rule (“IFR”) to allow banking organizations to exclude from regulatory capital
        measures any exposures pledged as collateral for a non-recourse loan from the Federal
        Reserve. Because PPPLF extensions of credit are non-recourse, PPP loans pledged to the
        PPPLF qualify for exclusion under the IFR.
        Consistent with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), all
        PPP loans receive a zero percent risk weight for purposes of the Federal banking agencies’
        risk-based capital rules. However, only PPP loans that are pledged to secure PPPLF
        extensions of credit may be excluded from leverage ratio calculations. PPP loans that are



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Paycheck Protection Program Liquidity Facility (PPPLF)
Historical List of Frequently Asked Questions
As of July 30, 2021


        pledged to secure primary credit funding at the discount window will not be excluded from
        leverage ratio calculations.

65. What is the capital treatment for purchased-PPP loans that are pledged to the PPPLF?
        A PPP loan that a depository institution purchases from another PPP lender and pledges to
        the PPPLF as collateral may be excluded from total leverage exposure, average total
        consolidated assets, advanced approaches total risk-weighted assets, and standardized risk-
        weighted assets, for the institution and its holding company, as applicable.

66. How should transactions with the PPPLF be treated under the liquidity coverage ratio (LCR)
    rule and the Complex Institution Liquidity Monitoring Report (FR 2052a)?
        On May 5, 2020, the federal banking agencies issued an interim final rule (Liquidity
        Coverage Ratio Rule: Treatment of Certain Emergency Facilities) to facilitate use of the
        PPPLF, and to ensure that the effects of its use are consistent and predictable under the LCR
        rule. The interim final rule neutralizes the effects of the LCR rule for banking organizations
        participating in the PPPLF. The interim final rule also makes conforming changes to the FR
        2052a reporting form.




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