What GAO found

The Paycheck Protection Program (PPP) supports small businesses through forgivable loans for payroll and other eligible costs. Early loans favored larger, rural businesses, according to GAO’s analysis of data from the Small Business Administration (SBA). Specifically, 42 percent of Phase 1 loans (approved April 3-16, 2020) went to larger companies (10-499 employees), although these companies accounted for only 4 percent of all US Small Businesses Similarly, businesses in rural areas received 19 percent of Phase 1 loans, but accounted for 13 percent of all small businesses. Banks made the vast majority of Phase 1 loans.

In response to concerns that some underserved businesses, particularly self-employed, minority, women, and veteran-owned businesses, faced challenges in obtaining loans, Congress and the SBA made a series of changes that increased lending to these businesses. For instance,

  • The SBA admitted that about 600 new lenders began making loans in Phase 2 (which ran from April 27 to August 8, 2020), including non-banks (generally, credit institutions that do not accept deposits).
  • The SBA developed a guide after Phase 1 to help self-employed persons participate in the program.
  • The SBA allocated funds to minority-owned businesses in part through Community Development Finance Institutions in Phases 2 through 3. (Phase 3 ran from January 12 to June 30, 2021).

When the PPP closed in June 2021, loans in traditionally underserved counties were commensurate with their representation in the broader small business community (see figure). While loans to companies with fewer than 10 employees remained disproportionately low, they increased significantly over the course of the program.

Paycheck Protection Program Loans, by Business Type or County

Why GAO did this study

The COVID-19 pandemic caused great turmoil in the US economy, leading to temporary and permanent business closures and a high level of unemployment. In response, in March 2020, Congress established PPPs under the CARES Act and finally granted commitment authority of approximately $ 814 billion for the program in three phases. When the initial funding for the program ran out in 14 days, concerns quickly arose that certain businesses could not access the program, prompting a series of changes by Congress and the SBA.

The CARES Act includes a provision for the GAO to monitor the federal government’s efforts to respond to the COVID-19 pandemic. GAO has published a series of reports on this program and made a series of recommendations to improve the performance and integrity of the program. This report describes trends in the participation of small businesses and lenders in PPPs.

GAO analyzed SBA loan-level PPP data and county-level data for four products from the US Census Bureau and surveyed a generalizable sample of PPP lenders, stratified by lender type and size. GAO also reviewed legislation, interim final rules, agency guidance, and relevant literature, as well as interviewed SBA officials.

For more information, contact John Pendleton at (202) 512-8678 or [email protected]


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