FHFA Allows FHLBs to Accept Paycheck Protection Program Loans as Collateral

(Published Apr. 24, 2020)

The Federal Housing Finance Agency announced that Federal Home Loan Banks can accept Paycheck Protection Program loans as collateral when making loans (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.

FHFA said it made the announcement “to support small and community banks.”

The Supervisory Letter can be found here. For other actions FHFA has taken, visit the FHFA Webpage on Coronavirus Actions.