Sen. Chris Coons, D-Delaware, led seven of his colleagues in a letter to Federal Reserve Chairman Jerome Powell to highlight the need to open the Federal Reserve’s Paycheck Protection Program Liquidity Facility to nonbank community financial institutions, including all certified community development financial institutions.
The facility provides financial backing to lenders of the Small Business Administration’s Paycheck Protection Program, a new federal program under the CARES Act that provides forgivable loans based on employee retention to small businesses nationwide. Currently, only depository institutions that originate PPP loans are eligible to borrow under the PPP Facility. The Fed recently indicated it is working to expand eligibility to participate in its PPP Facility to non-depository institutions in the future, which would include community development financial institutions, but these financial institutions need access immediately.
The letter was also signed by Sens. Sherrod Brown, D-Ohio; Michael Bennett, D-Colorado; Cory Booker, D-New Jersey; Catherine Cortez Masto, D-Nevada; Edward Market, D-Massachusetts; Mazie Hirono, D-Hawaii; and Jackie Rosen, D-Nevada.
Coons has also been leading the call to expand the SBA’s PPP to allow more CDFIs to become PPP lenders so that small business relief reaches underserved communities.
“We understand the Federal Reserve is working to expand eligibility to the PPP [Liquidity] Facility, and we urge the Federal Reserve to make the PPP Facility available to nonbank community financial institution lenders, including certified community development financial institutions, so that underserved businesses can get access to this critical capital,” the senators wrote. “We are concerned that the most at-risk businesses — smaller businesses, minority- and women-owned businesses and businesses located in low-income communities—will not have access to the Small Business Administration’s Paycheck Protection Program loans."
“We request that the Federal Reserve move quickly to open the PPP Facility to nonbank community financial institutions, including all certified CDFIs, and provide immediate access to all licensed SBA 7(a) lenders that are CDFIs or subsidiaries of CDFIs to the facility,” concluded the senators.
The full text of the letter is available at bit.ly/3f28J0c.