Download This PaperSmall Bank Financing and Funding Hesitancy in a Crisis: Evidence from the Paycheck Protection Program
73 Pages Posted: 28 Oct 2020 Last revised: 9 Sep 2021
There are 3 versions of this paper
Small Bank Financing and Funding Hesitancy in a Crisis: Evidence from the Paycheck Protection Program
Small Bank Financing and Funding Hesitancy in a Crisis: Evidence from the Paycheck Protection Program
Indirect Costs of Government Aid and Intermediary Supply Effects: Lessons from the Paycheck Protection Program
Date Written: September 6, 2021
Abstract
We study the delivery of subsidized financing to small firms through the Paycheck Protection Program (PPP). Smaller firms are less likely to gain early PPP access, an effect attenuated in small banks and firms with prior lending relationships. Their more even treatment offers a new rationale, beyond traditional soft information arguments, for why small businesses pair with small banks. We also detect a “funding hesitancy” in PPP uptake by small businesses, partly reflecting their wariness of the extensive, subjective government powers to investigate PPP recipients. We discuss the implications of the results for research and policies on small business financing.
Keywords: Bank Relationships, Covid-19, Coronavirus, Paycheck Protection Program, PPP, SBA, Small Business Lending
JEL Classification: G32, G38, H81, E61
Suggested Citation: Suggested Citation
Nagpurnanand Prabhala
The Johns Hopkins Carey Business School ( email )
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+1 410 234 4532 (Phone)
Manju Puri
Duke University - Fuqua School of Business ( email )
100 Fuqua Drive
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919-660-7657 (Phone)