On Monday, the Federal Reserve Board announced that it would extend its Paycheck Protection Program Liquidity Facility (PPPLF) for three months to June 30. The extension provides continued support for the flow of credit to small businesses through the Paycheck Protection Program (PPP).

The PPPLF extends term credit to financial institutions making PPP loans, accepting the PPP loans as collateral. The liquidity provided by the PPPLF helps eligible financial institutions fund additional PPP loans. The PPPLF was established under the board's 13(3) authority, and the extension from March 31 to June 30 was approved by the Secretary of the Treasury.

This is the Federal Reserve’s third extension of the PPPLF. It was first extended from its original August 2020 date to December 31, and then to March 31, 2021. This latest extension had been pushed for by community development financial institutions and nonbank Small Business Association lenders as they depend on the program to support new loans and would likely have to stop participating in the PPP program if the facility was to shut down.

Other currently active 13(3) facilities—the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility and the Primary Dealer Credit Facility—have not had significant usage since last summer and will expire as scheduled on March 31.