The Paycheck Protection Program (PPP) Loan is a financial assistance program established by the U.S. federal government to support small businesses during the COVID-19 pandemic. The program provided low-interest, forgivable loans to businesses with fewer than 500 employees. The primary goal was to help these businesses maintain their workforce and cover essential expenses. To apply, businesses needed to submit an application through an approved lender, detailing their payroll costs and financial needs. Typical loan amounts were calculated based on 2.5 times the average monthly payroll costs, with a maximum limit of $10 million. The PPP was introduced in March 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and saw multiple rounds of funding from 2020 through mid-2021.

The PPP Loan program was a critical lifeline for small businesses facing unprecedented challenges due to the COVID-19 pandemic. As revenues plummeted and access to credit tightened, many small enterprises were on the brink of collapse. The PPP provided much-needed financial relief, enabling businesses to keep employees on payroll and cover other operating costs such as rent and utilities. By June 2021, approximately $800 billion in loans had been distributed, preserving millions of jobs and preventing widespread economic damage. The program notably assisted a wide range of businesses, from restaurants and retail stores to service providers and healthcare practices, ensuring that a significant portion of the workforce remained employed during the crisis.

Despite its successes, the PPP Loan program faced several significant challenges and criticisms. A substantial portion of the funds did not reach the workers but rather accrued to business owners and shareholders. Studies indicated that between 66% and 77% of the PPP loan dollars went to these stakeholders rather than directly supporting employee wages. Additionally, there were numerous cases of fraud and abuse, with some businesses making illegal loan claims. Investigations revealed that many businesses that received loans were not genuinely at risk of closure, leading to inefficiencies in the allocation of funds. These shortcomings highlighted the need for better oversight and targeted distribution in future economic relief programs.

Written by Xitong Lu