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Statement of Hon. Dean Phillips on An Empirical Review of the Paycheck Protection Program

Nearly two years ago, the rapid spread of COVID-19 was wreaking havoc on small businesses across the country. As people stayed home to slow the spread of the virus, business for many small firms grounded to a halt. This was a time of tremendous uncertainty. Small businesses of all shapes and sizes began to wonder how long they could continue paying their rent, employees, and other key expenses.

Congress recognized the pandemic’s threat to small businesses and the overall economy and moved quickly to pass emergency legislation. In late March of 2020, Congress passed the CARES Act on a near-unanimous basis. The bill provided over $376 billion in relief for struggling small businesses.

Most of this money was allocated to the newly created Paycheck Protection Program, commonly known as PPP. Under PPP, banks and other private lenders made fully guaranteed and forgivable SBA loans to small businesses impacted by COVID. These loans were intended to allow small firms to continue to pay their employees and cover other expenses.

Since it launched in April of 2020, PPP has delivered almost $800 billion in emergency loans, making it one of the most extensive relief programs in American history. The Small Business Administration administered more aid during the COVID crisis than it did for all other disaster combined during its 67-year history. Given the massive scale of PPP and other relief programs, and the speed with which it needed to be stood up, it was inevitable that problems would arise.

For example, in the early days of PPP, it became clear that funds weren’t reaching the most vulnerable small businesses. Instead, larger companies with preexisting relationships with big banks were prioritized at the smallest small businesses’ expense. The initial rollout of PPP also shut out many businesses owned by women and minorities.


This committee worked diligently to address these inequities in the program throughout the pandemic. We fought for set-asides for underserved small businesses and worked to empower the community lenders that serve them. The PPP and Health Care Enhancement Act, created set-asides of PPP funds so that entities like CDFIs, CDCs, and SBA microloan intermediaries could fairly compete with big banks in the program. We also passed my bill, the PPP Flexibility Act, which made PPP loan forgiveness more accessible for firms who needed to spend a greater share of their loan proceeds on non-payroll costs.


And we also passed the Economic Aid Act, which delivered more relief to the hardest hit small businesses through “Second Draw” loans. These changes proved to be effective in making the program more accessible for small businesses. In later rounds of PPP, the average loan size reached approximately $44,000, a marked improvement over the $199,951 average loan size during the initial round.

Many researchers have analyzed the effectiveness of PPP in saving jobs and reaching small businesses. We have a few of those experts with us today. I look forward to hearing more about their research and discussing the insights they’ve gained into the overall efficacy of PPP, and the program updates Congress instituted. By looking closely at these findings, we can better prepare ourselves for future crises and help SBA’s non-pandemic loan programs reach more underserved businesses.

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