The Paycheck Protection Program (PPP) from the Small Business Perspective: Did the PPP Help Alleviate Financial and Economic Constraints?

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

Berger, Allen N. and Freed, Paul G. and Scott, Jonathan A. and Zhang, Siwen, The Paycheck Protection Program (PPP) from the Small Business Perspective: Did the PPP Help Alleviate Financial and Economic Constraints? (September 20, 2021). Available at SSRN: https://ssrn.com/abstract=3908707 or http://dx.doi.org/10.2139/ssrn.3908707