How Well Did PPP Loans Reach Low- and Moderate-Income Communities? - Mark E. Schweitzer and Garrett Borawski*

The SBA announced in regulators on the Federal Financial Institutions Examination October 2020 that “27 percent of the PPP loan dollars were Council (FFIEC).6 This approach compares the median made in low-and moderate-income communities which is in income in a census tract to the median income of the proportion to the percentage of population in these areas.”4 surrounding region. [...] For metropolitan tracts the region is the However, considering the distribution of loans in terms of surrounding metropolitan area; for rural and micropolitan the percentage of program dollars is just one way to think tracts it is the nonmetropolitan areas of the state. [...] We add the population of each census tract and to the same extent that it reached higher-income the race or ethnicity of the majority of residents in the communities. [...] The key data items As a check on our dataset, we first calculate the reach of we focus on are the amount of the loan; the name, legal the PPP in the same way the SBA did in its report: We structure, and address of the firm receiving the loan; and calculate the percentage of PPP loan funds that went to information (which is incomplete) on the characteristics LMI areas. [...] This is about the area in which the loans were made, we assign similar to the SBA’s reported rate of 27 percent and, as the each PPP loan to a specific census tract by geocoding the SBA noted, similar to the percentage of the US population firms that received PPP loans.