The 2021 Paycheck Protection Program Reboot: Loan Disbursement to Employer and Nonemployer Businesses in Minority Communities

29 Pages Posted: 14 Feb 2022 Last revised: 27 Sep 2024

See all articles by Robert W. Fairlie

Robert W. Fairlie

University of California, Los Angeles (UCLA); National Bureau of Economic Research

Frank M. Fossen

University of Nevada, Reno; IZA Institute of Labor Economics

Date Written: February 2022

Abstract

Was the $278 billion reboot of the $800 billion Paycheck Protection Program (PPP) in early 2021 disbursed equitably to minority communities? This paper provides the first analysis of how PPP funds were disbursed to minority communities in the third and final round of the program, which was specifically targeted to underserved and disadvantaged communities. Using administrative microdata on the universe of PPP loans, we find a strong positive relationship between PPP flows, as measured by the number of loans per employer business or loan amounts per employee, and the minority share of the population or businesses in the third round. In contrast, the relationship was negative in the first round of 2020 and less positive in the second round of 2020. We find a stronger positive relationship between minority share and loan numbers or amounts to employer businesses for first draw loans than second draw loans in 2021 (capturing some persistence in inequities). The patterns are similar for loan numbers and amounts to nonemployer businesses but with a strong positive relationship with minority share for both first draw and second draw loans. The rebooted PPP that ran from January to May 2021 appears to have been disbursed to minority communities as intended.

Suggested Citation

Fairlie, Robert W. and Fossen, Frank M., The 2021 Paycheck Protection Program Reboot: Loan Disbursement to Employer and Nonemployer Businesses in Minority Communities (February 2022). NBER Working Paper No. w29732, Available at SSRN: https://ssrn.com/abstract=4034182

Robert W. Fairlie (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

HOME PAGE: http://https://rfairlie.sites.luskin.ucla.edu/

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/robert_fairlie?page=1&perPage=50

Frank M. Fossen

University of Nevada, Reno ( email )

1664 N. Virginia Street
Reno, NV 89557-0030
United States

HOME PAGE: http://business.unr.edu/faculty/ffossen/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=2906

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
23
Abstract Views
294
PlumX Metrics