April 23, 2020
Bulletin No: 2020-12

Expanded Loan Collateral – Under the Small Business Administration’s Paycheck Protection Program

The Federal Home Loan Bank of Dallas (Bank) is pleased to announce that, effective April 27, we are ready to accept Small Business Administration (SBA) Paycheck Protection Program (PPP) loans as eligible collateral.

What new collateral is eligible?

Loans made through the PPP under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

Who is eligible to pledge SBA PPP Loans?

Members with credit ratings A through C are eligible to pledge SBA PPP loans

How can eligible members pledge the collateral?

Eligible members must execute a PPP Certification form
Members will need to opt in to list the PPP loans through SecureConnect

What haircut will be applied to this collateral?

10 percent of the unpaid principal of the loans (i.e., the Bank will lend 90 percent of the unpaid principal of the loans)
Please refer to the Collateral Valuation Guide for additional information regarding haircuts and other requirements

Are there limits on collateral pledged?

The collateral value obtained from PPP loans will be capped at the lesser of:
- (1) 20 percent of a member’s total borrowing capacity or (2) $5 billion in lendable collateral to any one member

When will members be able to pledge PPP loans as collateral?

Effective April 27, 2020, eligible members may expand their collateral availability by notifying the Bank that they want to opt in to this program and begin listing the PPP loans through SecureConnect.

How can I get additional clarification?

For additional information or to discuss the pledging process, please contact Collateral Services at 800.541.0597, Option 2, or collateral@fhlb.com

Please note that PPP loans are subject to the collateral eligibility requirements detailed in the Member Products and Credit Policy (MPCP) and Loan Collateral Eligibility Requirements (LCER).

Sincerely,

Gustavo Molina
SVP and Chief Banking Operations Officer