Posted on June 3, 2022 at 11:55 AM, updated October 27, 2023 at 2:21 PM Print
To help small businesses retain employees and sustain operations during the early stages of the COVID-19 pandemic, Congress created the Paycheck Protection Program (PPP), a forgivable loan guarantee program within the US Small Business Administration (SBA) that delivered almost $800 billion in capital to small businesses. In the two years since its creation, researchers like Dr. Iryna Demko, Research Associate in Levin’s Center for Economic Development, have reviewed and analyzed the loan data to assess the program’s effectiveness in preserving jobs and reaching underserved small business owners. Though the program is still in the forgiveness phase, much of the empirical research shows the program effectively helped save millions of jobs but failed to reach the smallest of businesses early enough to be maximally effective.
On March 16, 2022, the US House Committee held a hearing where US SBA Members heard from government and academic researchers about their findings on the effectiveness of the PPP and lessons learned about the distribution of loan funds. Dr. Demko was among the researchers selected to provide testimony. Her research shows that in 2020, minority-, Hispanic-, and female-owned small businesses received smaller PPP loans than other business counterparts of the same size; and structural interviews with PPP loan recipients in Northeast Ohio showed that businesses receiving smaller loan amounts had more difficulties and less knowledge about the loan application process compared to larger loan recipients.
A link to the recording of the hearing is below. Dr. Demko’s testimony can be found at 1 hour 19 minutes to 1 hours 24 minutes of the recording. At 1 hour 31 minutes, she answered questions by Mr. Phillips, Chairman, US House of Representative serving the 3rd District of Minnesota.