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Despite lessons learned from prior disaster relief funding programs, billions of dollars in fraudulent loans were issued by the Paycheck Protection Program (PPP) during the COVID-19 pandemic in the USA. The misuse of funds prevented business owners and their employees who are in true financial need from accessing program funds. The purpose of this paper is to identify techniques perpetrators used to obtain funds from the program illegally since its inception in March 2020 and concludes with suggestions on internal controls to reduce fraud occurrences in future relief packages.

The authors analyze 106 loan fraud cases reported by the US Department of Justice and compiled by the Project on Government Oversight to examine methods individuals used to illegally obtain funds from the program. The authors complement the data with lender characteristics from Call Reports and Business Insights. They further compare the fraud sample to the entire population of PPP loans, which is available on the US Small Business Administration website. The authors report descriptive statistics, correlations and multivariate regressions.

The authors find that most fraud cases falsify tax data to access program loans and inflate payroll numbers to obtain larger loan amounts. Applicants who sought large amounts applied using multiple companies and across multiple lenders, consistent with the use of multiple loans to avoid the scrutiny of a single large loan with a single lender. The authors find that cases with larger amounts relied on less regulated lenders, such as lending companies, rather than more regulated lenders.

The PPP is part of the largest ever US stimulus in which the private sector allocated funds. This study provides novel evidence of how fraudsters adapted to the program's rules to defraud the government.

This study contributes to a growing body of literature on the Paycheck Protection Program (PPP) by examining how lender incentives affected prioritization of large borrowers. In addition, this study separately examines incentives for commercial banks and credit unions during the program.

Using 2020 PPP loan data, the authors create a proxy for lender loan prioritization by comparing the skewness statistics of large and small loan distributions. A regression model is used to examine lender reporting incentives and loan prioritization.

Results show that larger borrowers were prioritized in receiving PPP loans earlier. Lenders with financial reporting concerns and commercial banks favored large borrowers to a greater extent.

This study may inform social planners and regulators about the benefits and costs of delegating emergency funding loan decisions to financial institutions.

The authors believe this paper is the first to examine financial institution reporting incentives in relationship to PPP lending practices. It adds novelty by examining lender incentives, while prior research has focused heavily on the economic consequences of the program and how borrower–lender relationships affected loan practices during the program.

The relationship between borrowers and lenders can reveal a lot of information regarding loan pricing, information costs, and competition. In this study, the authors investigate the impact of FinTech lenders on Paycheck Protection Program (PPP) loan disbursement. Specifically, the authors investigate financial technology companies’ ability to provide loans at greater distances, expanding the available resources for businesses struggling during the Covid-19 pandemic. The authors find that not only were FinTechs able to lend at greater distances, but also they provided loans to firms that were younger and had less bank competition in their headquarters’ zip codes. The results remain consistent and are generalizable to the complete population of PPP loans.

Given the previous research on the disparities of lending rates and their relationship with lending institutions for women-owned and minority-owned businesses, the study poses the research question: How much Paycheck Protection Program (PPP) funding was distributed to women-owned and minority-owned businesses in comparison to other firms? Additionally, as the purpose of the PPP funding was to assist small businesses in retaining their workforce, the authors pose a second research question: Of those who received PPP funding, how many jobs on average were retained? And importantly related to our first research question, are there differences across gender and race in the average number of jobs retained?

This is one of the first empirical studies with an initial sample size of 661,218 loans from July 2020 that examines whether the United States PPP had the intended impact to save jobs in small businesses and to examine any reported differences across gender and race in loans issued and jobs saved.

The authors find that significant differences exist between women- and men-owned businesses across all five loan categories, with male-owned firms receiving over 80% of PPP loans. However, women-owned firms saved more jobs on average across all but the largest loan category. Significant differences were also found between minority- and White-owned businesses with minority-owned businesses generally saving more jobs on average across most loan categories.

A limitation of this study pertains to certain missing data that were not reported by participants. While a participant may have included their gender, they may not have included their race. Therefore, the varying sets of data may not be a reflection of the same individuals. Additionally, the industries were not included in this analysis, which may shed light on the job creation differences across gender and race.

Many of the industries that have been significantly impacted have been the tourism, restaurant and hospitality sectors, and knowing “where the money was allocated” can assist policymakers in allocating additional funds to those businesses, especially those who did not receive funding in the initial first waves of PPP.

This is one of the first empirical studies that examine over 600,000 loans and found that women-owned firms saved more jobs across all loan categories except the largest loans. Significant differences were also found between minority- and White-owned businesses with minority-owned businesses generally saving more jobs on average across most loan categories.

The purpose of this study is to investigate the impact of religiosity on banks’ lending behavior during the COVID-19 pandemic in the USA.

This study uses the evidence from the issuance of Paycheck Protection Program (PPP) loans to relate local religiosity to banks’ participation in the PPP loan program and to banks’ loan portfolio performance during the pandemic.

The results of this study show that banks located in more religious counties have a higher level of lending through the PPP, supporting the ethical and moral concerns cultivated by local religious beliefs. In addition, banks’ lending before the pandemic is more prudential in more religious areas, as reflected in lower losses and higher returns at the onset of the crisis, especially in areas where business activities were most disrupted, supporting the stewardship role encouraged by religiosity.

Thanks to the structure of the PPP loans programs, the authors are able to disentangle the conflicting effects of morality and prudence on banks’ behavior.

The purpose of this study is to understand how majority employee-owned firms responded to the pandemic compared to firms that were not majority employee-owned. The Employee Ownership Foundation partnered with Rutgers University and the SSRS survey firm to survey ESOP and non-ESOP firms about their responses to the COVID-19 pandemic. A key purpose of the survey was to estimate firm-level changes in employment from mid-January to August (current employment figures were adjusted to August 5 using BLS industry employment trends). The survey also looked at other forms of adjustment and responses to the pandemic as reviewed below. The focus in this study is on the differences between firms that are majority owned by ESOPs and those that are not.

The survey included 247 executives from ESOP Association member companies and 500 executives from an SSRS business panel constructed to be representative of US companies with 50 or more employees. The survey started on August 5 and ended on September 23, 2020.

(1) Majority ESOP firms had employment declines from January to August that were on average only one-fourth as large as for other firms. The difference is maintained when controlling for industry membership. (2) Majority ESOP firms were more likely to be declared “essential,” but the lower employment cutbacks among majority ESOP firms remain among essential and non-essential businesses. As essential businesses, majority ESOP firms were more likely receive Paycheck Protection Program or other government pandemic assistance, but both assistance recipients and non-recipients had lower employment cutbacks among majority ESOP firms. (3) The extent of employment cutbacks was higher for non-managers than for managers, but the manager/non-manager gap was higher among other firms than among majority ESOP firms.

This study supports empirical findings done previously.

This study suggests to non-EO firms what they can do.

This study suggests strengths of EO firms.

A very original and one-of-a-kind dataset.

This paper reviews the response of both the national and state governments in the United States to the coronavirus pandemic and discusses budgetary challenges that are likely to be faced by the country over the next several years.

The paper uses government sources, analysis by internal and external think tanks and contemporaneous media accounts to describe both the problem and the governmental responses.

Since the first cases appeared in the US in early 2020, and particularly as the numbers started to expand substantially by March of that year, governments at all levels have worked to both respond to the immediate public health crisis and mitigate the economic effects of the pandemic. This included some immediate actions by the Federal Reserve to introduce more liquidity and four separate pieces of legislation passed in March and April 2020. The effect of this legislation has been to add $2.5 tr to 2020 and 2021 deficits. State and local governments, meanwhile, face years of budget shortfalls, which will require them ultimately to raise taxes and cut spending and may also require additional fiscal stimulus from the federal government. The magnitude of the fiscal effects will be driven by whether there is a second wave, how long the recession lasts, and what additional responses will be necessary in order to get the pandemic under control and deal with its aftermath.

The paper is likely the first to summarize the information about the federal and state responses, and the likely future impacts, in a single place.