The Paycheck Protection Program (PPP) from the Small Business Perspective: Did the PPP Help Alleviate Financial and Economic Constraints?
45 Pages Posted: 22 Sep 2021 Last revised: 3 Jan 2023
Date Written: September 20, 2021
Abstract
We address whether government financial aid to businesses during crises achieve their main goals regarding alleviating financial and economic constraints from crisis-related market malfunctioning. We focus on first-round Paycheck Protection Program (PPP) forgivable loans to millions of small businesses during COVID-19, using our novel dataset combining PPP data with measures of constraints perceived by small business members of the National Federation of Business (NFIB). Findings suggest the main goals are mostly met – PPP helped alleviate constraints; benefits were concentrated in likely PPP targets, and relief was temporary, without evidence of persistence that might otherwise interfere with later corrective market functioning.
Keywords: Small businesses, financial constraints, hiring, compensation, COVID-19, Paycheck Protection Program (PPP)
JEL Classification: G01, G21, G38
Suggested Citation: Suggested Citation