Fed extends PPP liquidity facility, will cut off 3 others at month-end

The Federal Reserve extended a liquidity facility aimed at boosting the Paycheck Protection Program but is cutting off three emergency facilities that helped calm markets in the early days of the COVID-19 pandemic.

The Paycheck Protection Program Liquidity Facility, or PPPLF, will now run through June 30. The program helps banks that are offering PPP loans to small businesses, accepting the lenders' PPP loans as collateral and offering those lenders credit so they have the flexibility to make more PPP loans.

The Fed, however, is letting three other emergency funding facilities expire on March 31: the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, and the Primary Dealer Credit Facility. The Fed rolled out the three facilities to respond to the turmoil in March 2020 with the goal of calming those markets by promising a Fed backstop.

The programs "have not had significant usage since last summer and will expire as scheduled," the Fed said in its announcement.