US: The Paycheck Protection Program Was a Flop

Since this spring, the federal government has handed out $517 billion through the Paycheck Protection Program, the main lifeline that Congress threw to small and midsize businesses to help them survive the coronavirus crisis. It’s a weighty amount of money, almost two-thirds of what Washington spent on the entire stimulus package it passed in 2009 to combat the Great Recession.

Unfortunately, it doesn’t seem to have bought us very much.

Hastily crafted as the economy began to collapse earlier this year, PPP was designed to keep businesses alive and Americans attached to their jobs while the country shut down to try and squelch the pandemic. It offers employers with 500 or fewer workers low-interest loans to cover their operating expenses, which the government will forgive if they avoid layoffs. (Somewhat larger companies can qualify if they are in the hospitality industry or meet the government’s previously established small-business size standards.) For most borrowers, it’s essentially free money that they can use to pay their bills and their staff.


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