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Did the $660 Billion Paycheck Protection Program and $220 Billion Economic Injury Disaster Loan Program Get Disbursed to Minority Communities in the Early Stages of COVID-19?

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  • Robert W. Fairlie
  • Frank Fossen

Abstract

Social distancing restrictions and health- and economic-driven demand shifts from COVID-19 shut down many small businesses with especially negative impacts on minority owners. Is there evidence that the unprecedented federal government response to help small businesses – the $659 billion Paycheck Protection Program (PPP) and the related $220 billion COVID-19 Economic Injury Disaster Loans (EIDL) – which had a stated goal of helping disadvantaged groups, was disbursed evenly to minority communities? In this descriptive research note, we provide the first detailed analysis of how the PPP and EIDL funds were disbursed across minority communities in the country. From our analysis of data on the universe of loans from these programs and administrative data on employer firms, we generally find a slightly positive relationship between PPP loan receipt per business and the minority share of the population or businesses, although funds flowed to minority communities later than to communities with lower minority shares. PPP loan amounts, however, are negatively related to the minority share of the population. The EIDL program, in contrast, both in numbers and amounts, was distributed positively to minority communities.

Suggested Citation

  • Robert W. Fairlie & Frank Fossen, 2021. "Did the $660 Billion Paycheck Protection Program and $220 Billion Economic Injury Disaster Loan Program Get Disbursed to Minority Communities in the Early Stages of COVID-19?," NBER Working Papers 28321, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28321
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    1. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, December.
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    9. Alexander W. Bartik & Zoe B. Cullen & Edward L. Glaeser & Michael Luca & Christopher T. Stanton & Adi Sunderam, 2020. "When Should Public Programs be Privately Administered? Theory and Evidence from the Paycheck Protection Program," NBER Working Papers 27623, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Kristopher Deming & Stephan Weiler, 2023. "Banking Deserts and the Paycheck Protection Program," Economic Development Quarterly, , vol. 37(3), pages 259-276, August.
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    3. Greenwald, Daniel L. & Howell, Sabrina T. & Li, Cangyuan & Yimfor, Emmanuel, 2024. "Regulatory arbitrage or random errors? Implications of race prediction algorithms in fair lending analysis," Journal of Financial Economics, Elsevier, vol. 157(C).
    4. Maksim Belitski & Christina Guenther & Alexander S. Kritikos & Roy Thurik, 2022. "Economic effects of the COVID-19 pandemic on entrepreneurship and small businesses," Small Business Economics, Springer, vol. 58(2), pages 593-609, February.
    5. Aaron J. Staples & Thomas P. Krumel, 2023. "The Paycheck Protection Program and small business performance: Evidence from craft breweries," Small Business Economics, Springer, vol. 61(3), pages 931-956, October.
    6. Vijay Kumar & Hammam Alshazly & Sahar Ahmed Idris & Sami Bourouis, 2021. "Evaluating the Impact of COVID-19 on Society, Environment, Economy, and Education," Sustainability, MDPI, vol. 13(24), pages 1-21, December.
    7. Sabrina T. Howell & Theresa Kuchler & David Snitkof & Johannes Stroebel & Jun Wong, 2024. "Lender Automation and Racial Disparities in Credit Access," Journal of Finance, American Finance Association, vol. 79(2), pages 1457-1512, April.
    8. Khlystova, Olena & Kalyuzhnova, Yelena & Belitski, Maksim, 2022. "The impact of the COVID-19 pandemic on the creative industries: A literature review and future research agenda," Journal of Business Research, Elsevier, vol. 139(C), pages 1192-1210.

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    More about this item

    JEL classification:

    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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