Has the Paycheck Protection Program Succeeded?

Glenn Hubbard · Michael R. Strain

59 citations0/0 files storedBrookings Papers on Economic Activity

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COVID-19 Pandemic Impacts Banking stability, regulation, efficiency Firm Innovation and Growth

Abstract

Enacted March 27, 2020, the Paycheck Protection Program (PPP) was the most ambitious and creative fiscal policy response to the Pandemic Recession in the United States.PPP offers forgivable loans -essentially grants -to businesses with 500 or fewer employees that meet certain requirements.In this paper, we present evidence that PPP has substantially increased the employment, financial health, and survival of small businesses, using data from the Dun & Bradstreet Corporation.We use event studies and standard difference-in-difference models to estimate the effect of a small business applying for larger PPP loans and of a small business being eligible for PPP based on size.While our findings are informative, we believe it is too early to issue conclusive judgment on PPP's success.We offer lessons for the future from the PPP experience thus far.

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References

2020Fear, lockdown, and diversion: Comparing drivers of pandemic economic decline 2020 2020Labor Markets During the COVID-19 Crisis: A Preliminary View 1999New Developments in Models of Search in the Labor Market 2020How Did COVID-19 and Stabilization Policies Affect Spending and Employment? A New Real-Time Economic Tracker Based on Private Sector Data 2020The U.S. Labor Market during the Beginning of the Pandemic Recession 2021Bank liquidity provision across the firm size distribution 2012Match Quality, Worker Productivity, and Worker Mobility: Direct Evidence from Teachers 2011Recessions and the Cost of Job Loss

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2021Measuring Small Business Dynamics and Employment with Private-Sector Real-Time Data 2021Rethinking stabilization policies; Including supply-side measures and entrepreneurial processes 2024Racial disparities in the Paycheck Protection Program 2024Loan guarantees in a crisis: An antidote to a credit crunch?

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