Which businesses got PPP loans? Probably those that needed them the least, researchers say.
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Who got loans under the Paycheck Protection Program?
This is money — grants if the paperwork is done right — to keep businesses afloat and employees on payrolls until the effects of the pandemic ease. Under pressure from Congress, federal officials have agreed to eventually release that information. But there’s new research from Lawrence Schmidt at the MIT Sloan School of Management and Dimitris Papanikolaou of the Northwestern Kellogg School of Management that suggests those who got the most aid, may have needed it the least.
Marketplace’s Nova Safo has more on that. The following is an edited transcript of his conversation with “Marketplace Morning Report” host David Brancaccio.
Nova Safo: The researchers looked at a number of different data sets that are already available, and what he extrapolated is that those most affected by job losses right now — lower-income workers — got the least amount of money from the Paycheck Protection Program, because loan amounts were based on how much firms paid their employees. Here’s what Schmidt had to say:
“And so what this ends up meaning is that if you’re a firm that pays higher salaries, you’re going to be eligible for more aid. But this has the perhaps unintended consequence of sending more aid to the types of firms where perhaps people are least exposed to the pandemic.”
For example, Schmidt found the biggest loans went to the professional and technical services sector — lots of remote workers, fewer jobs lost.
David Brancaccio: Congress is now considering what another pandemic aid package might look like. In light of his findings, what does Schmidt suggest?
Safo: Well, what he’s saying is that the initial rounds of aid were pretty uniform, and that made sense because Congress needed to act quickly. But now Schmidt suggests a different approach:
“When some people are really being hit hard and others are going to be more or less OK, able to keep their jobs, it might be a little more advantageous to put into place a more targeted approach. Because then you could send larger checks or send checks for longer periods of time to these types of sectors that are severely disrupted.
One example he gave here is child care: Lower-income employees and women are more likely to not be able to work if they don’t have child care for kids stuck at home because schools are closed. So that’s one way he says Congress can target aid in the next round.
COVID-19 Economy FAQs
What’s the latest on the extra COVID-19 unemployment benefits?
As of now, those $600-a-week payments will stop at the end of July. For many, unemployment payments have been a lifeline, but one that is about to end, if nothing changes. The debate over whether or not to extend these benefits continues among lawmakers.
With a spike in the number of COVID-19 cases, are restaurants and bars shutting back down?
The latest jobs report shows that 4.8 million Americans went back to work in June. More than 30% of those job gains were from bars and restaurants. But those industries are in trouble again. For example, because of the steep rise in COVID-19 cases in Texas, Gov. Greg Abbott, a Republican, increased restrictions on restaurant capacities and closed bars. It’s created a logistical nightmare.
Which businesses got Paycheck Protection Program loans?
The numbers are in — well, at least in part. The federal government has released the names of companies that received loans of $150,000 or more through the Paycheck Protection Program.
Some of the companies people are surprised got loans include Kanye West’s fashion line, Yeezy, TGI Fridays and P.F. Chang’s. The companies you might not recognize, particularly some smaller businesses, were able to hire back staff or partially reopen thanks to the loans.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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