Did the Paycheck Protection Program and Economic Injury Disaster Loan Program get disbursed to minority communities in the early stages of COVID-19?

Robert Fairlie and Frank Fossen

Small Business Economics, 2022, vol. 58, issue 2, No 10, 829-842

Abstract: Abstract Social distancing restrictions and health- and economic-driven demand shifts from COVID-19 shut down many small businesses with especially negative impacts on minority owners. Is there evidence that the unprecedented federal government response to help small businesses—the Paycheck Protection Program (PPP) and the related COVID-19 Economic Injury Disaster Loans (EIDL)—which had a stated goal of helping disadvantaged groups, was disbursed evenly to minority communities? In this descriptive research note, we provide the first detailed analysis of how the 2020 PPP and EIDL funds were disbursed across minority communities in the country. From our analysis of data on the universe of loans from these programs and administrative data on employer firms, we generally find a slightly positive relationship between PPP loan receipt per business and the minority share of the population or businesses, although funds flowed to minority communities later than to communities with lower minority shares. PPP loan amounts per employee, however, are negatively related to the minority share of the population. The EIDL program, in contrast, both in numbers per business and amounts per employee, was distributed positively to minority communities.

Keywords: Small business; Entrepreneurship; Business owners; Self-employment; Paycheck Protection Program; PPP; Economic Injury Disaster Loans; EIDL; COVID-19; Coronavirus; Shelter in place restrictions; Social distancing restrictions; Minority business; Racial inequality; J15; L26 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s11187-021-00501-9

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