Small Business Lending and the Paycheck Protection Program

Mueller, Jack; Spiegel, Mark M.

Journal Article

Small Business Lending and the Paycheck Protection Program

Abstract: The Paycheck Protection Program (PPP) and the PPP Liquidity Facility were launched early in the pandemic to help many small businesses survive. These programs encouraged banks to lend more extensively to small businesses over the first half of 2020. Since then, however, banks have reduced their exposure to these loans, leaving no significant changes in small business lending associated with participation in these programs over the three-year period from 2020 through 2022. This raises some doubt that emergency lending programs encourage long-term relationships that outlast the programs.

Keywords: Paycheck Protection Program (PPP); Paycheck Protection Program Liquidity Facility; emergency lending; covid19;