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What Do 25 Million Records of Small Businesses Say about the Effects of the PPP?

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Abstract

We utilize Dun & Bradstreet data on firms’ financial condition to examine the allocation of Paycheck Protection Program (PPP) loans and their impact. Three main findings emerge. First, firms in better financial condition prior to the COVID outbreak were advantaged in the allocation of PPP loans. Second, firms’ financial condition improved significantly and persistently after receiving a loan, and this effect was more pronounced among the smaller and less financially sound firms. Third, we demonstrate empirically that the heterogeneity in firms’ financial condition must be accounted for to correctly identify and estimate the overall effect of the PPP.

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  • Gustavo Joaquim & J. Christina Wang, 2022. "What Do 25 Million Records of Small Businesses Say about the Effects of the PPP?," Working Papers 22-23, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:95345
    DOI: 10.29412/res.wp.2022.23
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    Cited by:

    1. Marsh, W. Blake & Sharma, Padma, 2024. "Loan guarantees in a crisis: An antidote to a credit crunch?," Journal of Financial Stability, Elsevier, vol. 72(C).
    2. J. Christina Wang, 2022. "The Main Street Lending Program: Who Borrowed and How Have They Benefited?," Working Papers 22-24, Federal Reserve Bank of Boston.
    3. Doniger, Cynthia L. & Kay, Benjamin, 2023. "Long-lived employment effects of delays in emergency financing for small businesses," Journal of Monetary Economics, Elsevier, vol. 140(C), pages 78-91.

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    More about this item

    Keywords

    Paycheck Protection Program; small business lending; financial frictions;
    All these keywords.

    JEL classification:

    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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