The PPP was funded by the U.S. Treasury Department through forgivable loans that enabled small businesses to maintain payroll, retain employees who may have been laid off in response to the social distancing protocols that went into effect in April 2020, or to cover other overhead costs.
To support the PPP, the Federal Reserve provided a liquidity backstop to PPP lenders through its Paycheck Protection Program Liquidity Facility or PPPLF.