Impact of Race and Gender on the SBA Paycheck Protection Program (PPP) Loan Amounts

Abstract

The Paycheck Protection Program (PPP) helped to preserve employment relationships during thesudden shutdown of economic activity due to the Covid-19 pandemic. In this paper, we analyzeaccess of the minority and women-owned businesses to PPP loans. Our quantitative results showthat a minority-owned business with 5 to 9 employees received a 21% smaller PPP loan thantheir white-owned business counterpart. A women-owned small business with 5 to 9 employeesreceived a 15% smaller PPP loan than a male-owned business. Using Lee bounds, we found thatwomen-owned businesses in rural counties received $2,634 and $8,856 smaller PPP loans thanthose in urban counties. From the interviews with PPP loan recipients in Northeast Ohio, welearned that businesses that received smaller loan amounts had more difficulty with the loanapplication process compared to businesses that received larger loans. The discrepancy in PPPloans to women- and minority-owned businesses may have stemmed from a lack of access andknowledge about the program itself.