Paycheck Protection Program

The Paycheck Protection Program (PPP) is a $953-billion business loan program established by the United States federal government during the Trump administration in 2020 through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help certain businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses continue paying their workers.

The Paycheck Protection Program allows entities to apply for low-interest private loans to pay for payroll and certain other costs. A PPP loan allows a business applicant to receive funds up to 2.5 times the applicant's average monthly payroll costs. Sometimes, an applicant may receive a second draw typically equal to the first. The loan proceeds to cover payroll costs, rent, interest, and utilities. The loan may be partially or fully forgiven if the business keeps its employee counts and employee wages stable. The U.S. Small Business Administration implements the program. The deadline to apply for a PPP loan was March 31, 2021.^[1]

Some economists have found that the PPP did not save as many jobs as purported and aided too many businesses that were not at risk of going under.^[2][3] They noted that other programs, such as unemployment insurance, food assistance, and aid to state and local governments, would have been more efficient at strengthening the economy. The program was criticized for its exorbitant cost, costing approximately $169k – $258k per job saved, and that the majority of benefits flowed to small-business owners, their creditors and their suppliers rather than to workers.^[4] It is estimated that only 25% of the funding allocated went to jobs that would have been lost.^[5][6] Supporters of the program note that the PPP functioned well to prevent business closures and cannot be measured on the number of jobs saved alone.^[2] By one estimate, the PPP reduced mortgage delinquencies by $36 billion in 2020.^[7]