The 2021 Paycheck Protection Program Reboot: Loan Disbursement to Employer and Nonemployer Businesses in Minority Communities
Was the $278 billion reboot of the $800 billion Paycheck Protection Program (PPP) in early 2021 disbursed equitably to minority communities? This paper provides the first analysis of how PPP funds were disbursed to minority communities in the third and final round of the program, which was specifically targeted to underserved and disadvantaged communities. Using administrative microdata on the universe of PPP loans, we find a strong positive relationship between PPP flows, as measured by the number of loans per employer business or loan amounts per employee, and the minority share of the population or businesses in the third round. In contrast, the relationship was negative in the first round of 2020 and less positive in the second round of 2020. We find a stronger positive relationship between minority share and loan numbers or amounts to employer businesses for first draw loans than second draw loans in 2021 (capturing some persistence in inequities). The patterns are similar for loan numbers and amounts to nonemployer businesses but with a strong positive relationship with minority share for both first draw and second draw loans. The rebooted PPP that ran from January to May 2021 appears to have been disbursed to minority communities as intended.
We would like to thank Karen Mills, Javier Miranda, and participants at the AEA Meetings, NBER Entrepreneurship Workshop, the PPIC California labor market workshop, the Kauffman Foundation Entrepreneurship Issue Forum, Axios/Google Small Business Matters Expert Panel, and JPMorgan Chase Institute Data Dialogue meetings for comments and suggestions. The research project has also benefited from numerous conversations with the press and policymakers. An initial analysis of the third (2021) round of the PPP was prepared for the U.S. Senate Committee on Small Business and Entrepreneurship. Special thanks go to Zach Mider, Jason Grotto and Cedric Sam for discussions of the data and analysis. We also thank Gagandeep Sachdeva for research assistance. The authors did not receive funding for this research project and have no disclosures. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Robert Fairlie & Frank M. Fossen, 2022. "The 2021 Paycheck Protection Program Reboot: Loan Disbursement to Employer and Nonemployer Businesses in Minority Communities," AEA Papers and Proceedings, vol 112, pages 287-291. citation courtesy of