Structure, Risk, and Access to Credit: Reassessment of the Paycheck Protection Program Effectiveness

Abstract

The Paycheck Protection Program (PPP) was the largest targeted business support program in the United States, yet its firm-level effects remain contested. I link administrative PPP and SBA 7(a) records to a near-universe panel of U.S. employer firms from Dun and Bradstreet, covering roughly 30 million establishments, and evaluate short-run impacts on employment, financial stress, and commercial credit risk. To address non-random take-up, I combine propensity score matching with difference-in-differences on a balanced panel from March to September 2020 and exploit variation in loan holding duration. PPP receipt raises employment by about 0.07 percent on average but improves failure-risk and delinquency-risk percentile rankings by roughly 1.2 and 3.2 points, respectively, with longer loan duration strengthening all three margins. Heterogeneity analysis shows that small-to-medium firms and borrowers with intermediate pre-crisis risk experience the largest gains, while micro firms, very large firms, and highly stressed firms benefit less. Firms without prior 7(a) borrowing relationships realize particularly large credit-score gains. Overall, the evidence indicates that PPP functioned more as a balance-sheet and credit-risk backstop than as a powerful jobs program for the average treated firm. The results highlight how firm structure, pre-crisis financial health, and access to government-backed credit shape the effectiveness of large-scale emergency support.