Washington, D.C. — U.S. Senator Marco Rubio, Chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, detailed the historic success of the Paycheck Protection Program in a CNBC op-ed and a detailed analysis posted on Medium.
This morning at 10:00 a.m. EST, he will convene a hearing titled, “Small Business in Crisis: The 2020 Paycheck Protection Program and its Future.”
Writing in CNBC, Rubio says PPP “is the single largest federal fiscal policy program enacted in recent history” and “the single most effective relief program passed by Congress.” He continues:
“Across the United States, the PPP helped support up to 55 million jobs, including up to 4.5 million in manufacturing, with an average firm size of just 20 employees. Even before the pandemic, manufacturing was experiencing a widening skills gap. An inability to retain skilled employees through the downturn would have exacerbated that gap and further degraded American global competitiveness.
“The PPP acted as an emergency brake on further decline. Despite cynical attacks, the program’s benefits swept across businesses in every industry and corner of our nation. And while many in the media and cynical politicians have tried to make a claim of massive fraud, the evidence appears to point otherwise. As Democrat Chairman of the House Select Committee on the Coronavirus Crisis Jim Clyburn found this September, the PPP fraud rate of 0.76 percent is actually lower than estimates for the private mortgage market and other CARES Act programs.
“And thanks to the work of mission-oriented lenders and community development financial institutions, minority-owned small businesses -- long among the most vulnerable to exogenous shocks -- benefited especially. Black and Hispanic-owned firms account for 7.8 percent of all small businesses in America, but they received 10.6 percent of total PPP loans distributed, resulting in 10 percent of the total jobs retained.”
In a separate, 2,900-word Medium piece, Rubio details the program’s historic success with data, analysis and charts from a forthcoming report prepared by the U.S. Senate Committee on Small Business and Entrepreneurship.
1. The Paycheck Protection Program delivered the largest amount of support to the U.S. economy at the time when it was most needed.
The Paycheck Protection Program injected over $525 billion into the U.S. economy in less than four months, making it the largest and most rapidly implemented fiscal policy support enacted by the CARES Act.
When PPP first began on April 3, 2020, the U.S. economy was in free-fall: unemployment claims were at their highest level in modern history, and nearly half of all small businesses reported they would shut down permanently in less than six months. Before stimulus checks or expanded unemployment benefits were fully available, eligible small and medium-sized businesses were approved for and began to receive nearly $350 billion in PPP loans.
In May 2020, before any major U.S. state began to re-open, economists predicted the economy would continue to shed labor in massive amounts, projecting the loss of at least another 8 million jobs, which would result in an unemployment rate higher than at any time since the Great Depression. While businesses began to spend their PPP loans, at least $150 billion in PPP loans were disbursed in May. Instead of seeing the expected loss of over 8 million jobs, in May the U.S. economy gained 2.5 million jobs, the largest single month increase since 1939.
Figure 2. PPP Total Amounts Approved, Imputed Total PPP Amounts Spent by Businesses (billions of dollars), and U.S. Employment Change by Day (percent change from April 7, 2020).