April 23, 2020

FHFA: FHLBs to Accept Paycheck Protection Program Loans as Collateral

To support small and community banks, the Federal Housing Finance Agency announced that Federal Home Loan Banks (FHLBanks) can accept Paycheck Protection Program (PPP) loans as collateral when making loans, called advances, to their members.

FHLBanks can accept loans guaranteed by the Small Business Administration under PPP provided FHLBanks comply with certain safety and soundness requirements. On April 3, the Small Business Administration launched PPP, a $349 billion emergency loan program. Congress is currently considering increasing the funding available through PPP.  

To date, the FHLBanks have been able to meet the needs of their members, especially small and community banks, during the COVID-19 national emergency. Accepting PPP loans will provide additional liquidity for small and community banks to borrow from their FHLBank to support the small businesses in their communities. See the Supervisory Letter here

To see the actions FHFA has taken to help Americans impacted by the coronavirus remain in their homes please visit FHFA’s Webpage on Coronavirus Actions​. ​

This post was originally published here.