The Paycheck Protection Program: Minority vs. Non-Minority Bank Response

Abstract

We are the first to empirically analyze whether the "Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns" (Guidance) program was successful. The program was implemented to promote the Paycheck Protection Program (PPP) loans provided by Minority Depository Institutions (MDIs) in the second round compared to the first round of PPP. Using both loan-level data from the Small Business Administration (SBA) and balance-sheet-level data from the Federal Deposit Insurance Corporation (FDIC), we obtain compelling empirical evidence indicating that MDIs issued relatively more PPP loans (scaled by institution assets) than non-MDIs in the second round. This finding is evidence that the goal of dedicated access for MDIs under the Guidance program was successful. It also enhances the understanding of the PPP lending program and the impact of the Federal Reserve PPP Liquidity Facility (PPPLF) in terms of the role played by MDIs.