Business

Federal Reserve says around 600 smaller banks tapped PPP facility in its first days

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WASHINGTON: Around 600 banks, most of them small community institutions, tapped the Federal Reserve's Paycheck Protection Program facility for about US$30 billion of loans as of May 6, the US central bank reported on Saturday in its first detailed disclosure under the new program.

The lenders used 3,676 PPP loans they had issued to small businesses as collateral for money from the central bank's PPP program, clearing room on their own balance sheet for further lending. The Fed said it had collected US$2.5 million in interest and fees for the transactions so far.

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The US$30 billion involved is a fraction of the roughly US$530 billion issued through the Paycheck Protection Program.

The PPP is one of the core programs set up by the federal government to keep the economy stable during the coronavirus pandemic. It offers loans to small businesses which are forgiven if they are used to pay workers' wages and some other allowed expenses.

The Fed program was set up to encourage banks to participate, allowing those who choose to do so a way to make the loans to businesses and collect a fee for doing so, then borrow a similar amount from the Fed at a nominal inRead More – Source