Public Firm Borrowers of the US Paycheck Protection Program

64 Pages Posted: 3 May 2020 Last revised: 16 Sep 2021

See all articles by Anna Cororaton

Anna Cororaton

United States Energy Information Administration

Samuel Rosen

Temple University, Fox School of Business

Date Written: April 30, 2020

Abstract

We document that nearly half of US public firms were eligible for the Paycheck Protection Program (PPP) in 2020, with 41.8% of those eligible choosing to borrow. Consistent with the program's objectives, borrowers tended to be smaller with less cash, higher leverage, and fewer investment opportunities. In addition, firm values declined upon PPP loan announcement and borrowers grew slower in 2020 relative to nonborrowers. We document that 13.5% of PPP borrowers, in particular those facing more public scrutiny, returned their loans after public backlash. Overall, concerns of reputational harm appeared to dissuade eligible public firms from availing emergency government funding.

Keywords: CARES Act, SBA, government emergency policy, firm reputation

JEL Classification: E61, E65, G38, H81

Suggested Citation

Cororaton, Anna and Rosen, Samuel, Public Firm Borrowers of the US Paycheck Protection Program (April 30, 2020). Available at SSRN: https://ssrn.com/abstract=3590913 or http://dx.doi.org/10.2139/ssrn.3590913

Anna Cororaton

United States Energy Information Administration ( email )

1000 Independence Ave., SW
Washington, DC 20585
United States

Samuel Rosen (Contact Author)

Temple University, Fox School of Business ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States

HOME PAGE: http://sites.google.com/view/samuel-rosen/

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