How Well Did PPP Loans Reach Low- and Moderate-Income Communities?

Paycheck Protection Program loans didn’t reach low- to moderate-income communities to the same extent as higher-income communities, according to a new Cleveland Fed report.

Researchers Mark Schweitzer and Garrett Borawski looked at loan counts rather than loan dollars in their analysis of loan data from the Small Business Administration, which they linked to census tracts. They found that although PPP loans reached businesses across the United States in communities of all income levels, the funds were not evenly distributed. Even so, PPP loans had higher coverage rates in LMI communities than did conventional loans to small businesses.

“The unevenness of coverage of this key program points to the need for other avenues of support in these communities to support equity in federal aid to entrepreneurs during and following the pandemic,” Schweitzer and Borawski said.

Read the full report: How Well Did PPP Loans Reach Low- and Moderate-Income Communities?

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.455.4479