Discussion Paper

What Drove Racial Disparities in the Paycheck Protection Program?

Abstract: Numerous studies of the Paycheck Protection Program (PPP), which provided loans to small businesses during the COVID-19 pandemic, have documented racial disparities in the program. Because publicly available PPP data only include information on approved loans, prior work has largely been unable to assess whether these disparities were driven by borrower application behavior or by lender approval decisions. In this post, which is based on a related Staff Report and NBER working paper, we use the Federal Reserve’s 2020 Small Business Credit Survey to examine PPP application behavior and approval decisions and to study the strengths and limitations of fintech lenders in enhancing access to credit for Black-owned businesses.

Keywords: discrimination; racial disparities; Paycheck Protection Program (PPP); bank lending; FinTech Lending; administrative burden; inequality;

JEL Classification: G01; G21; G23; G28;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2023-06-01

Number: 20230601