Did the Paycheck Protection Program Hit the Target?

Abstract

for comments. Laurence O'Brien and Igor Kuznetsov provided excellent research assistance. João Granja gratefully acknowledges support from the Jane and Basil Vasiliou Faculty Scholarship and from the Booth School of Business at the University of Chicago. Yannelis and Zwick gratefully acknowledge financial support from the Booth School of Business at the University of Chicago. We are grateful to the Small Business Administration, Homebase, Womply, and Opportunity Insights for data, and to the CDBA for helping us understand the institutional background. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w27095.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Information frictions and access to the Paycheck Protection Program

“…While our results are largely consistent with information frictions playing a central role, other mechanisms are also consistent with lower rates of receiving a PPP loan conditional on applying, and longer delays when waiting for approval. For example, Granja et al (2020) show that access to banks which participated heavily in PPP lending may have been an important determinant in receiving a PPP loan, which would be consistent with some of the facts we document. Nevertheless, Appendix Table 7 provides some evidence that geographic proximity to financial institutions offering PPP loans are not confounding the estimates on firm size in Table 1 .…”

“…Conditional on receiving a PPP loan, businesses with 0 to 4.5 employees waited around two days longer for their application to be approved. These patterns, in particular longer wait times, are also consistent with other frictions in the application process, such as differential access or differing existing relationships with banks that made a larger number of PPP loans (see Granja et al (2020) ).…”

“…Another set of recent papers specifically studies the impact of the PPP. Granja et al (2020) use administrative data on the distribution of PPP loans and high-frequency micro-level employment data to evaluate how well the CARES Act targeted businesses in need. They conclude that funds flowed to areas that were less impacted by the economic crisis in terms of declines in hours worked or business shutdowns.…”

COVID-19 financial support to small businesses in Switzerland: evaluation and outlook

“…We thank Cédric Tille for this insight. We cannot test the proposition directly, as the legal form of our sample businesses is not recorded in the data.9 This finding is consistent with recent research on U.S. data, suggesting that the "Paycheck Protection Program" did not channel support to the hardest hit firms and had little effect on employment at small businesses(Granja et al, 2020;Chetty et al, 2020). The main problems in the U.S. case seem to be uneven access to banking services by small businesses and inefficient targeting of the policy at the most affected sectors.…”

Sheltering in place and domestic violence: Evidence from calls for service during COVID-19

“…Approximately 35% of workers shifted to working remotely ( Dingel and Neiman, 2020 ; Papanikolaou and Schmidt, 2020 ; Brynjolfsson et al, 2020 ) as public school children shifted to learning remotely. The labor market impacts were closely followed by sweeping economic policies directed towards both firms and households ( Granja et al, 2020 ; Ganong et al, 2020 ).…”