The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses

77 Pages Posted: 19 Aug 2020

See all articles by Alexander Bartik

Alexander Bartik

University of Illinois at Urbana-Champaign - Department of Economics

Zoe Cullen

Harvard University - Business School (HBS)

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Michael Luca

Harvard University - Business School (HBS)

Christopher Stanton

Harvard University - Business School (HBS); National Bureau of Economic Research (NBER)

Aditya Sunderam

Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: July 30, 2020

Abstract

The Paycheck Protection Program (PPP) aimed to quickly deliver hundreds of billions of dollars of loans to small businesses, with the loans administered via private banks. In this paper, we use firm level data to document the demand and supply of PPP funds. Using an instrumental variables approach, we find that PPP loans led to a 14 to 30 percentage point increase in a business’s expected survival, and a positive but imprecise effect on employment. Moreover, the effects on survival were heterogeneous and highlight an important tradeoff faced by policymakers: while administering the loans via private banks allowed for rapid delivery of funds, it also limited the government’s ability to target the funding - instead allowing pre-existing connections between businesses and banks to determine which firms would benefit from the program.

Suggested Citation

Bartik, Alexander and Cullen, Zoe and Glaeser, Edward L. and Luca, Michael and Stanton, Christopher and Sunderam, Aditya, The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses (July 30, 2020). Harvard Business School NOM Unit Working Paper No. 21-021, Harvard Business School Entrepreneurial Management Working Paper No. 21-021, Available at SSRN: https://ssrn.com/abstract=3676759 or http://dx.doi.org/10.2139/ssrn.3676759

Alexander Bartik

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
1407 W. Gregory
Urbana, IL 61801
United States

Zoe Cullen

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=879471

Edward L. Glaeser

Harvard University - Department of Economics ( email )

Littauer Center
Room 315A
Cambridge, MA 02138
United States
617-496-2150 (Phone)
617-496-1722 (Fax)

Brookings Institution

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Michael Luca

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Boston, MA 02163
United States

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=602417

Christopher Stanton (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Aditya Sunderam

Harvard University ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
60
Abstract Views
554
rank
351,529
PlumX Metrics