The Paycheck Protection Program (PPP) from the Small Business Perspective: Did the PPP Help Alleviate Financial and Economic Constraints?

Abstract

We employ two novel datasets to evaluate whether the Paycheck Protection Program (PPP) met short- term and longer-term goals. One dataset matches PPP with small business members of the National Federation of Business (NFIB) that report their financial constraints and their employees’ economic constraints. We find more alleviation of both constraints for PPP recipients, consistent with short-term goals. We employ data on post- versus pre-crisis county employment, wages, and new businesses to test the longer-term goal of improved community crisis recoveries from the short-term constraint relief. We find to the contrary – worse longer-term recoveries in counties with more short-term constraint relief.

Keywords: Small businesses, financial constraints, hiring, compensation, COVID-19, Paycheck Protection Program (PPP)

JEL Classification: G01, G21, G38