Information frictions and access to the Paycheck Protection Program

John Humphries, Christopher Neilson and Gabriel Ulyssea

Journal of Public Economics, 2020, vol. 190, issue C

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 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.

Keywords: COVID-19; Small business; Information frictions; CARES Act (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272720301080
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Information Frictions and Access to the Paycheck Protection Program (2020)
Working Paper: Information Frictions and Access to the Paycheck Protection Program (2020)
Working Paper: Information Frictions and Access to the Paycheck Protection Program (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:190:y:2020:i:c:s0047272720301080

DOI: 10.1016/j.jpubeco.2020.104244

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().