Human Service Organizations’ Participation in the Paycheck Protection Program: A Cross-Sector Comparison

Abstract

ABSTRACT The Paycheck Protection Program (PPP) was passed during the COVID-19 pandemic to assist small and medium-sized organizations. However, only a fraction of eligible nonprofits applied for and received loans. Using a contract failure lens, we posit that nonprofits are more likely to have higher per-employee loan amounts and use funds for payroll than for-profits. Analyzing a sample of 174,496 first-draw loans across human service sub-fields, results suggest differences by size, particularly among single-employee organizations, and by nonprofit and for-profit recipients. Single-employee organizations represent nearly half of HSO recipients, suggesting an unintended consequence of prioritizing short processing times over more scrutiny.