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What Do 25 Million Records of Small Businesses Say about the Effects of the PPP?

August 01, 2022Gustavo Joaquim, J. Christina Wang Federal Reserve Bank of Boston
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This paper examines the allocation of Paycheck Protection Program (PPP) loans and their impact. Three main findings emerge. First, firms in better financial condition prior to the COVID outbreak were advantaged in the allocation of PPP loans. Second, firms’ financial condition improved significantly and persistently after receiving a loan, and this effect was more pronounced among the smaller and less financially sound firms. Third, the heterogeneity in firms’ financial condition must be accounted for to correctly identify and estimate the overall effect of the PPP.