Document Type

Case Study

Case Series

Market Support Programs

JEL Codes

G01, G28


In the early days of the COVID-19 pandemic, the US Congress passed and funded the Paycheck Protection Program (PPP) to help small businesses facing business disruptions keep workers on their payrolls and meet other expenses. The PPP, signed into law on March 27, 2020, provided a mechanism for authorized lenders to extend concessionary, forgivable loans guaranteed by the Small Business Administration (SBA). Lenders ultimately extended approximately $800 billion in PPP loans. The SBA distributed the funds when the loan either defaulted or met the law's terms for SBA forgiveness. To buttress lenders' ability to fund PPP loans, the Federal Reserve created the Paycheck Protection Program Liquidity Facility (PPPLF) under its emergency lending authority provided by Section 13(3) of the Federal Reserve Act. This emergency facility provided liquidity against PPP loan collateral at 100% of face value, on a nonrecourse basis, and was available to all PPP lenders, including nonbanks. The PPPLF proved effective both as a direct source of funds and as a backstop facility, particularly for smaller banks. The PPPLF peaked at $90.6 billion in outstanding credit on June 30, 2021. The PPPLF was the longest-running Federal Reserve 13(3) facility of the COVID-19 pandemic, opening on April 16, 2020, and closing on July 30, 2021.

Date Revised