NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses

Alexander W. Bartik, Zoe B. Cullen, Edward L. Glaeser, Michael Luca, Christopher T. Stanton, Adi Sunderam

NBER Working Paper No. 27623
Issued in July 2020
NBER Program(s):Asset Pricing, Corporate Finance, Industrial Organization, Labor Studies, Public Economics, Political Economy, Productivity, Innovation, and Entrepreneurship

The Paycheck Protection Program (PPP) aimed to quickly deliver hundreds of billions of dollars of loans to small businesses, with the loans administered via private banks. In this paper, we use firm-level data to document the demand and supply of PPP funds. Using an instrumental variables approach, we find that PPP loans led to a 14 to 30 percentage point increase in a business’s expected survival, and a positive but imprecise effect on employment. Moreover, the effects on survival were heterogeneous and highlight an important tradeoff faced by policymakers: while administering the loans via private banks allowed for rapid delivery of funds, it also limited the government’s ability to target the funding - instead allowing pre-existing connections between businesses and banks to determine which firms would benefit from the program.

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Document Object Identifier (DOI): 10.3386/w27623

 
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