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How Well Did PPP Loans Reach Low- and Moderate-Income Communities?

Author

Listed:
  • Garrett Borawski
  • Mark E. Schweitzer

Abstract

We investigate the degree to which Paycheck Protection Program (PPP) loans reached small businesses in low- and moderate-income (LMI) communities. We use PPP loan data from the Small Business Administration that we geocode and link to census tracts. We assess the program’s reach in a few ways and focus on the number of loans, rather than the amount of funds, that went to different areas in order to capture the program’s impact on businesses with fewer than 50 employees—the vast majority of small businesses. We find evidence that the program did have a broad reach within LMI communities, but that it reached higher-income communities to a greater extent and areas with Black, Hispanic, and American Indian or Alaska Native majorities to a lesser extent.

Suggested Citation

  • Garrett Borawski & Mark E. Schweitzer, 2021. "How Well Did PPP Loans Reach Low- and Moderate-Income Communities?," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2021(13), pages 1-5, May.
    • Handle: RePEc:fip:fedcec:92108
    DOI: 10.26509/frbc-ec-202113
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    References listed on IDEAS

    as
    1. Haoyang Liu & Desi Volker, 2020. "Where Have the Paycheck Protection Loans Gone So Far?," Liberty Street Economics 20200506, Federal Reserve Bank of New York.
    2. Garrett Borawski & Mark E. Schweitzer, 2021. "Which Industries Received PPP Loans?," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2021(08), pages 1-8, April.
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    Cited by:

    1. Douglas David Klein & Zion Kang, 2021. "Payroll Protection Plan Epilogue," RAIS Conference Proceedings 2021 0101, Research Association for Interdisciplinary Studies.
    2. Alessandro Di Nola & Leo Kaas & Haomin Wang, 2023. "Rescue policies for small businesses in the Covid-19 recession," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 579-603, December.
    3. Klein, Aaron, 2022. "The Financialization of Recession Response," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 4(4), pages 47-76, April.
    4. Johnna Montgomerie, 2023. "COVID Keynesianism: locating inequality in the Anglo-American crisis response," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 16(1), pages 211-223.
    5. Alessandro Di Nola & Leo Kaas & Haomin Wang, 2023. "Rescue policies for small businesses in the Covid-19 recession," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 579-603, December.
    6. Luke Petach, 2022. "A Tullock Index for assessing the effectiveness of redistribution," Public Choice, Springer, vol. 191(1), pages 137-159, April.

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