Pandemic Relief Prevented Business Closures, Protected Jobs, and Led to Job Creation
Today, Administrator Isabel Casillas Guzman, head of the U.S. Small Business Administration (SBA) and voice in President Biden’s Cabinet for America’s more than 34 million small businesses, issued the following statement on a new report highlighting the positive impact of SBA pandemic relief programs – including the Paycheck Protection Program (PPP) and COVID Economic Injury Disaster Loans (EIDL), as well as the American Rescue Plan’s Restaurant Revitalization Fund (RRF) and Shuttered Venue Operators Grant (SVOG).
“As the country experienced an unprecedented global pandemic, the SBA continued scaling to deliver aid to save millions of small businesses and strengthen their resilience through the Biden-Harris Administration’s historic Investments in America, which heralded in the strongest economic recovery of any nation and fueled an unprecedented small business boom,” said Administrator Guzman. “The survival of small businesses and record-breaking 21 million new business applications over the past four years is a reflection of entrepreneurs’ innovation and resilience, as well as the Biden-Harris Administration’s commitment to leveling the playing field and generating opportunities for small businesses nationwide.”
The study shows that participating in one of the four pandemic-era relief programs, most notably PPP, was associated with lower rates of job loss and business closure. Notably, the report found that action taken by the Biden-Harris Administration in early 2021 to ensure equitable access to these crucial relief programs resulted in increased participation, most significantly in PPP, by the smallest and youngest businesses – helping to preserve 48 million jobs at smaller businesses (1-19 staff). It even helped create more jobs: between March 2021 and March 2022, businesses participating in PPP created roughly 9 million jobs.
Other highlights from the report include:
(Smaller: 1-19 staff; Mid-size: 20-499 staff; Startup: 0 years; Young: 1-5 years; Older: >10 years)
- Young businesses of any size who received early first draw PPP loans saw 46% lower rates of closure in 2022 compared to non-recipients. In particular, smaller businesses with early loans saw the lowest relative closure rates.
- Young, smaller businesses who received early loans were able to protect jobs at much higher rates compared to non-recipients. Mid-size businesses who received both first and second draw PPP loans had the highest job protection rates.
- In 2021, following Biden-Harris Administration policy changes:
- Ten times more smaller businesses received loans compared to mid-size businesses.
- Three times as many startups received PPP loans in 2021 compared to 2020.
- Two times as many young businesses received PPP loans in 2021 compared to 2020.
COVID EIDL Program
- 820,000 small businesses received $155 billion in COVID EIDLs.
- Young businesses participated and were approved at higher rates than older businesses. 24% of young businesses received COVID EIDLs, three times the participation rate of the oldest employer businesses.
- Young businesses that received COVID-EIDLs experienced an 11% lower closer rate compared to similar aged businesses that either didn’t apply for, or had been denied, a loan.
Restaurant Revitalization Fund
- Over 100,000 restaurants and other food service businesses received $28.6 billion.
- Nearly two-thirds of RRF funds reached businesses owned by women, veterans, and economically and socially disadvantaged individuals.
- Full-service restaurants, drinking places, cafeterias, and snack and beverage bars that received RRF funding closed at lower rates than non-recipients.
- For hotels and caterers, simply applying for RRF was associated with a lower closure rate, regardless of whether the business received funds.
Shuttered Venue Operators Grant
- $14 billion in grant funding went to over 13,000 eligible live performance venues, live performing arts organization operators, theatrical stages, and other live performance operators.
- For movie theaters, arts, entertainment, and recreation businesses, recipients of SVOG closed down at lower rates in 2022 compared to businesses that did not receive funding.