Federal Reserve: Working to expand PPPLF for additional SBA-qualified lenders as soon as possible

Early Friday morning in Asia, the US Federal Reserve announces that it is working to expand access to the Paycheck Protection Program Liquidity Facility (PPPLF) for additional SBA-qualified lenders as soon as possible to facilitate lending to small businesses via the Small Business Administration's (SBA) Paycheck Protection Program (PPP).

Key quotes

SBA-qualified PPP lenders include depository institutions, such as banks and credit unions, as well as non-depository institution lenders, such as some Community Development Financial Institutions. Currently, only depository institutions are eligible to participate in the PPPLF, and over 1000 have already been approved to access the program.

The SBA's PPP guarantees loans from qualified lenders to small businesses so that those businesses can keep workers employed. The PPPLF supports the PPP by extending credit to financial institutions that make PPP loans, using the loans as collateral. The additional liquidity from the PPPLF increases the capacity of financial institutions to make additional PPP loans.

FX implications

This adds to the Fed’s qualitative support to combat the coronavirus (COVID-19) and hence further details are required for traders to react to the news. That said, the markets remain mostly quiet during the early Friday morning in Asia.

• US VP Pence: There are promising signs of progress in a number of states including New York

• Coronavirus update: US CDC reports an increase of 25,858 new cases, 1,804 deaths as of April 22

• US Sec. of State Pompeo: We strongly believe China didn’t report the new coronavirus outbreak in a timely fashion

• White House Adviser Kudlow: Sees big rebound for US economy if reopens over next few weeks – Fox Business