Navigating Grant Program Representative Bias: Insights from Paycheck Protection Program for Hospitality SMEs and Entrepreneurs

Abstract

Allocation of public funding, such as those of government grants, can be influenced by subjective factors, similar to biases that research has found in commercial business lending based on organizational and ownership factors. However, there is limited research that has investigated biases in grant programs. Using data from the Paycheck Protection Program in the United States this study examined whether biases existed in grant programs for hospitality businesses. Results of regression analyses indicate that hospitality businesses received greater total loan amounts and smaller loan amounts per employee than businesses in other industries. Additionally, male business owners, White business owners, and corporations received greater loan amounts compared to other demographic groups. This study contributes to extending the current literature on commercial lending by enhancing our understanding of representative biases in government-directed lending programs for businesses.