Information frictions and access to the Paycheck Protection Program

John Eric Humphries, Christopher A. Neilson, Gabriel Ulyssea

Research output: Contribution to journalArticlepeer-review

48 Scopus citations


The Paycheck Protection Program (PPP) extended 669 billion dollars of forgivable loans in an unprecedented effort to support small businesses affected by the COVID-19 crisis. This paper provides evidence that information frictions and the “first-come, first-served” design of the PPP program skewed its resources towards larger firms and may have permanently reduced its effectiveness. Using new daily survey data on small businesses in the U.S., we show that the smallest businesses were less aware of the PPP and less likely to apply. If they did apply, the smallest businesses applied later, faced longer processing times, and were less likely to have their application approved. These frictions may have mattered, as businesses that received aid report fewer layoffs, higher employment, and improved expectations about the future.

Original languageEnglish (US)
Article number104244
JournalJournal of Public Economics
StatePublished - Oct 2020

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Finance


  • CARES Act
  • COVID-19
  • Information frictions
  • Small business


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