Cleveland Fed: PPP Loans Helped Mitigate Effects of Recession

Paycheck Protection Program lending helped to soften the effects of the pandemic-related recession on state-level employment growth, and had “significant” benefits overall, the Federal Reserve Bank of Cleveland concluded in a new research brief last week.

Specifically, researchers found that during the first round of PPP lending, having one additional week of payroll support through PPP loans “would have mitigated the state-level employment decline by between around 1.5 percentage points to 2.3 percentage points.”

They also suggested that states where small businesses received the bulk of PPP funds early saw smaller net employment declines. However, they noted that “more research is needed to understand the true economic mechanisms behind these results and how state-level pandemic restrictions played a role.