Impact of Race and Gender on the SBA Paycheck Protection Program (PPP) Loan Amounts

Abstract

The Paycheck Protection Program (PPP) helped to preserve employment relationships during the
sudden shutdown of economic activity due to the Covid-19 pandemic. In this paper, we analyze
access of the minority and women-owned businesses to PPP loans. Our quantitative results show
that a minority-owned business with 5 to 9 employees received a 21% smaller PPP loan than
their white-owned business counterpart. A women-owned small business with 5 to 9 employees
received a 15% smaller PPP loan than a male-owned business. Using Lee bounds, we found that
women-owned businesses in rural counties received $2,634 and $8,856 smaller PPP loans than
those in urban counties. From the interviews with PPP loan recipients in Northeast Ohio, we
learned that businesses that received smaller loan amounts had more difficulty with the loan
application process compared to businesses that received larger loans. The discrepancy in PPP
loans to women- and minority-owned businesses may have stemmed from a lack of access and
knowledge about the program itself.

Keywords: women-owned business, minority-owned business, Paycheck Protection Program (PPP)

JEL Classification: L26, R51, G18