Insight

Special Alert | CARES Act: Focus on small and mid-sized businesses

Federal agencies took actions to facilitate the flow of credit to households and businesses.

Amy S. Matsuo

Amy S. Matsuo

National Leader, Regulatory Insights, KPMG US

+1 919-244-0266

Federal agencies have taken the following actions to facilitate the flow of credit to households and businesses:

  • The FRB announced new credit facilities:
    • The Paycheck Protection Program Liquidity Facility (PPPLF) to support liquidity to the SBA’s Paycheck Protection Program (PPP).  The PPLF will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value. 
    • The Main Street Lending Program, which will purchase up to $600 billion in loans to small and mid-sized businesses. Firms that have taken advantage of the PPP may also take out Main Street loans.
    • Expansion, in size and scope, of the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as the Term Asset-Backed Securities Loan Facility (TALF).
    • The Municipal Liquidity Facility, which  will offer up to $500 billion in lending to states and municipalities.

            Links to additional details on each of the programs are available here.

  • The federal banking agencies issued an interim final rule to permit banking organizations to “neutralize” the regulatory capital effects of participating in the PPPLF and to clarify that a zero percent risk weight applies to loans covered by the PPP for capital purposes.
  • The SEC issued an order providing temporary conditional exemptive relief for business development companies (BDCs) to enable them to make additional investments in small and medium-sized businesses, including those with operations affected by COVID-19.