Discrimination in Lending? Evidence from the Paycheck Protection Program
45 Pages Posted: 1 Feb 2021 Last revised: 22 Jun 2021
Rachel M. B. Atkins
St. John's University Tobin College of Business
Lisa D. Cook
Michigan State University - Department of Economics and James Madison College; NBER
Robert Seamans
New York University (NYU) - Leonard N. Stern School of Business
Date Written: May 31, 2021
Abstract
We assess the role of race in loans made through the Paycheck Protection Program (PPP). The PPP program, created by the U.S. government as a response to the Covid-19 pandemic, provides loans to small businesses so they can keep employees on their payroll. We argue that the historical record and PPP program design choices made it likely that many Black-owned businesses received smaller PPP loans than White-owned businesses. Using newly released data on the PPP program, we find that Black-owned businesses received loans that were approximately 50 percent lower than observationally similar White-owned businesses. The effect is marginally smaller in areas with more bank competition and disappeared over time as changes to the PPP program were implemented allowing for entry by fintechs and other non-traditional lenders.
Keywords: Minority-owned firms, Racial discrimination, Discrimination in financial markets, Overcoming discriminatory barriers
JEL Classification: G21, J16, L2, L26
Suggested Citation: Suggested Citation
Rachel Atkins
St. John's University Tobin College of Business ( email )
Jamaica, NY 11439
United States
Lisa D. Cook
Michigan State University - Department of Economics and James Madison College ( email )
South Case Hall
East Lansing, MI 48825-1205
United States
NBER ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Robert Seamans (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )
44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States
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