Fed Will Lend Directly to Businesses for First Time Since Great Recession in Coronavirus Response
For the first time since the 2008 financial crisis, the Federal Reserve is getting into the corporate paper market, announcing a credit facility of as much as $1 trillion to buy short-term corporate debt securities.
In a nutshell, "commercial paper" is a term for short-term borrowing by corporations. Specifically, the just-announced program will buy three-month paper (think of this as ultra-short-term corporate bonds) and will charge interest to the borrowing companies.
The ability for companies to borrow on a short-term basis is critical to a healthy economy. The commercial paper market allows the borrowing companies to pay employees and customers, and to conduct other vital business functions. During turbulent times, issuers of commercial paper can find it difficult to use the open market, and if there's no short-term corporate credit availability, it can be a big problem for the companies who need it.
Source Fool.com
