Has the Paycheck Protection Program Succeeded?

66 Pages Posted: 27 Oct 2020

See all articles by R. Glenn Hubbard

R. Glenn Hubbard

Columbia University

Michael R. Strain

American Enterprise Institute; IZA

Abstract

Enacted March 27, 2020, the Paycheck Protection Program (PPP) was the most ambitious and creative fiscal policy response to the Pandemic Recession in the United States. PPP offers forgivable loans — essentially grants — to businesses with 500 or fewer employees that meet certain requirements. In this paper, we present evidence that PPP has substantially increased the employment, financial health, and survival of small businesses, using data from the Dun & Bradstreet Corporation. We use event studies and standard difference-in-difference models to estimate the effect of a small business applying for larger PPP loans and of a small business being eligible for PPP based on size. While our findings are informative, we believe it is too early to issue conclusive judgment on PPP's success. We offer lessons for the future from the PPP experience thus far.

Keywords: Paycheck Protection Program, PPP, Pandemic Recession, CARES Act, COVID-19

JEL Classification: H20, H25, H32, J01, J08, J23

Suggested Citation

Hubbard, R. Glenn and Strain, Michael, Has the Paycheck Protection Program Succeeded?. IZA Discussion Paper No. 13808, Available at SSRN: https://ssrn.com/abstract=3718188 or http://dx.doi.org/10.2139/ssrn.3718188

R. Glenn Hubbard (Contact Author)

Columbia University

Michael Strain

American Enterprise Institute ( email )

1789 Massachusetts Ave NW
Washington, DC 20036
United States

HOME PAGE: http://sites.google.com/site/mrstrain/

IZA ( email )

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