CARES Act

Abstract
The Paycheck Protection Program (PPP) extended over 650 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 it’s 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 likely mattered, as businesses that received aid re-port fewer layoffs, higher employment, and improved expectations about the future.
Year of Publication
2020
Number
643
Date Published
05/2020
Publication Language
eng
Citation Key
11706
Neilson, C., Humphries, J., & Ulyssea, G. (2020). Information Frictions and Access to the Paycheck Protection Program. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01p2676z45h (Original work published 05/2020AD)
Working Papers