ABSTRACT

Information Frictions and Access to the Paycheck Protection Program   [open pdf - 1MB]

From the Abstract: "The Paycheck Protection Program (PPP) extended 669 billion dollars of forgivable loans in an unprecedented effort to support small businesses affected by the COVID-19 [coronavirus disease 2019] crisis. This paper provides evidence that information frictions and the 'first-come, first-served' design of the PPP program skewed its resources towards larger firms and may have permanently reduced its effectiveness. Using new daily survey data on small businesses in the U.S., we show that the smallest businesses were less aware of the PPP and less likely to apply. If they did apply, the smallest businesses applied later, faced longer processing times, and were less likely to have their application approved. These frictions may have mattered, as businesses that received aid report fewer layoffs, higher employment, and improved expectations about the future."

Report Number:
NBER Working Paper No. 27624; National Bureau of Economic Research Working Paper No. 27624
Author:
Publisher:
Date:
2020-07
Series:
Copyright:
2020 Christopher Neilson, John Eric Humphries, and Gabriel Ulyssea. Posted here with permission. Documents are for personal use only and not for commercial profit.
Retrieved From:
National Bureau of Economic Research: https://www.nber.org/
Format:
pdf
Media Type:
application/pdf
URL:
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