Public Firm Borrowers of the US Paycheck Protection Program
50 Pages Posted: 3 May 2020 Last revised: 26 Mar 2021
Date Written: April 30, 2020
We document that nearly half of public firms were eligible for the Paycheck Protection Program (PPP) in 2020, with 46.1% of those eligible choosing to borrow. Consistent with the program's objectives, borrowers tended to be smaller with less cash, higher leverage, and fewer investment opportunities. In addition, they faced negative profits in the second quarter of 2020 and their firm values declined upon PPP loan announcement. We find that 13.5% of PPP borrowers, in particular the healthier firms, returned their loans after public backlash. Overall, concerns of reputational harm appeared to dissuade eligible public firms from availing emergency government funding.
Keywords: CARES Act, SBA, government emergency policy, firm reputation
JEL Classification: E61, E65, G38, H81
Suggested Citation: Suggested Citation