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  • 2020
  • Working Paper
  • HBS Working Paper Series

The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses

By: Alexander Bartik, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton and Adi Sunderam
  • Format:Print
  • | Language:English
  • | Pages:77
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Abstract

The Paycheck Protection Program (PPP) aimed to quickly deliver hundreds of billions of dollars of loans to small businesses, with the loans administered via private banks. In this paper, we use firm-level data to document the demand and supply of PPP funds. Using an instrumental variables approach, we find that PPP loans led to a 14 to 30 percentage point increase in a business’s expected survival, and a positive but imprecise effect on employment. Moreover, the effects on survival were heterogeneous and highlight an important tradeoff faced by policymakers: while administering the loans via private banks allowed for rapid delivery of funds, it also limited the government’s ability to target the funding—instead allowing pre-existing connections between businesses and banks to determine which firms would benefit from the program.

Keywords

Paycheck Protection Program; Targeting; Impact; Entrepreneurship; Health Pandemics; Small Business; Financing and Loans; Outcome or Result; United States

Citation

Bartik, Alexander, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton, and Adi Sunderam. "The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses." Harvard Business School Working Paper, No. 21-021, August 2020.
  • SSRN
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About The Authors

Zoe B. Cullen

Entrepreneurial Management
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Michael Luca

Negotiation, Organizations & Markets
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Christopher T. Stanton

Entrepreneurial Management
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Adi Sunderam

Finance
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    Akamai Technologies: Expanding the Talent Pipeline

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    Shanty Real Estate: Teaching Note Supplement

    By: Michael Luca
    • February 2023
    • Quarterly Journal of Economics

    Increasing the Demand for Workers with a Criminal Record

    By: Zoë Cullen, Will Dobbie and Mitchell Hoffman
More from the Authors
  • Akamai Technologies: Expanding the Talent Pipeline By: Christopher Stanton, Lynda M. Applegate, Allison Ciechanover, Emily Grandjean and Sophie Beck
  • Shanty Real Estate: Teaching Note Supplement By: Michael Luca
  • Increasing the Demand for Workers with a Criminal Record By: Zoë Cullen, Will Dobbie and Mitchell Hoffman
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