Paycheck Protection Program and lending discrimination in the US hospitality industry

Abstract

This study aims to assess lending discrimination in the Paycheck Protection Program (PPP) in the hospitality industry. PPP is one of the initiatives of the US government in response to the COVID-19 pandemic to support small businesses. While the US Congress aimed to target minority-owned and other businesses at a disadvantage, early research on the program found lending discrimination. This study contributes to this research stream by being the first to focus on the nationwide hospitality industry and consider all three funding rounds. Specifically, the study analyzed differences in approval amounts based on race and gender and found significant differences between White- and Black or African American-owned businesses and between male- and female-owned businesses, with the latter of these groups at a considerable disadvantage. The results of this study could guide policymakers in creating assistance programs with more stringent clauses to ensure the support gets to those most in need.