Small business lending under the PPP and PPPLF programs

We use Call Report data to examine the effects of the Paycheck Protection Program (PPP) and the PPP Liquidity Facility (PPPLF) on small business and farm lending by individual commercial banks. As … See more

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The Paycheck Protection Program Liquidity Facility (PPPLF)

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May 20, 2020 · On April 9, 2020, the Federal Reserve announced that it would take additional actions to provide up to $2.3 trillion in loans to support the economy in response to the COVID …

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Former D.C. Public Official Pleads Guilty To Bank Fraud

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1 day ago · In April 2020, Congress authorized over $300 billion in additional PPP funding. The PPP allowed qualifying small-businesses and other organizations to receive loans with a …

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FAQs about Small business lending under the PPP and PPPLF programs Coupon?

What is a ppplf loan?

The PPPLF offers a source of liquidity to the financial institution lenders who lend to small businesses through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). Under the PPPLF, each Reserve Bank will lend to eligible borrowers on a nonrecourse basis, taking PPP loans as collateral. ...

Does participation in PPP programs affect lending to small businesses?

As participation in the programs was associated with lending to small businesses directly, we use an instrumental variables (IV) approach to identify a causal effect of the programs on lending based on histor- ical bank relationships with the Small Business Administration that administered the PPP. ...

Does the PPP program affect bank lending growth?

The PPP program has a positive and statistically significant impact on all banks in our sample. However, PPPLF program participation proved much more important for small business and farm lending growth among small and medium-sized bank lending growth than it was for large banks. ...

Does participation in the ppplf promote bank lending growth?

Our results indicate that both programs encouraged lending growth over the first half of 2020. However, while the PPP encouraged greater lending across all banks, only small and medium-sized bank lending growth was significantly related to participation in the PPPLF. Previousarticlein issue Nextarticlein issue JEL classification E58 E63 G14 G18 G32 ...

Does the ppplf program increase small business and farm lending growth?

Overall, our results indicate that participation in the PPPLF program was associated with substantively higher small business and farm lending growth. However, our sub-samples indicate that the program was more important as a source of lending growth for small and medium-sized banks than it was for large banks. ...

What is a PPP loan?

PPPis defined as the ratio of PPP participation, as per Call Report filings, to total small business and farm lending.4The PPP permitted loans exceed both our small business and farm lending level thresholds, going as high as $10 million. As a result, it is possible, and happens in practice, that bank values of PPPcan exceed one. ...