Impact of Race and Gender on the SBA Paycheck Protection Program (PPP) Loan Amounts

An overview of the Paycheck Protection Program (PPP) loans and implications for agricultural enterprise recovery from COVID-19

“…While conducting interviews, Demko and Sant'Anna (2021) confirmed that the lack of clarity and transparency about the PPP application was an issue. Although SBA provided an application form, every lender had its own form, format, or portal.…”

Limits to capital: Assessing the role of race on the Paycheck Protection Program for African American farmers in America

“…In general, African American farmers operate on smaller parcels of land than white farmers (Taylor, 2018). Previously, Demko and Sant'Anna (2021) showed that businesses received unequal treatment from PPP lenders based on their smaller size. In rural counties, operating in smaller farms may restrict their revenues, as they may be competing with larger farms with greater economies of scale and access to capital.…”

“…The persistent presence of discrimination in various socio‐economic settings still garners meaningful conversation in policymaking and research (Crockett, 2022). Most recently, discrimination has been investigated within the general loan distribution of the Paycheck Protection Program (Atkins et al, 2021; Chernenko & Scharfstein, 2022; Demko & Sant'Anna, 2021), within United States Department of Agriculture (USDA) loan programs (Escalante et al, 2006; Escalante et al, 2018), within academic institutions (Hilsenroth et al, 2022), and within farmers use of non‐traditional lenders (McDonald et al, 2021). Limited credit access can pose challenges in terms of farm start‐ups and growth.…”

“…Yet, studies on racial discrimination in PPP have documented differences in the approved loan amounts based on applicants' demographics including gender and race (Demko & Sant'Anna, 2021). These studies find that minority‐owned businesses had not only a lower probability of obtaining PPP loans compared to white‐owned businesses but also less amount of loans, after controlling for lending institution locations and credit scores of borrowers (Atkins et al, 2021; Chernenko & Scharfstein, 2022; Fairlie & Fossen, 2021).…”

“…Chernenko and Scharfstein (2022) show that African American‐ and Hispanic‐owned firms are 20.5% and 7% less likely than white‐owned firms to receive PPP loans and the distance to bank branches only partially explains the disparities. Demko and Sant'Anna (2021) find that minority‐owned businesses received on average 6% less in PPP loan amounts than white‐owned businesses.…”