GAO-22-105788 — Paycheck Protection Program: Program Changes Increased Lending to Smaller and Underserved Businesses (March 16, 2022)

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The one-page Highlights of GAO-22-105788, a U.S. Government Accountability Office testimony before the Subcommittee on Oversight, Investigations, and Regulations, Committee on Small Business, House of Representatives, dated March 16, 2022. It reports GAO's analysis of Small Business Administration data finding that 42 percent of early Paycheck Protection Program loans (approved April 3–16, 2020) went to businesses with 10 to 499 employees, which accounted for 4 percent of all U.S. small businesses. It lists changes such as SBA admitting about 600 new lenders, and states that by June 2021 lending in traditionally underserved counties was proportional to their representation. The testimony addresses which businesses received early loans and how program changes affected participation, and is based on GAO's September 2021 report GAO-21-601.

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United States Government Accountability Office 
 
  
Highlights of GAO-22-105788, a testimony 
before the Subcommittee on Oversight, 
Investigations, and Regulations, Committee on 
Small Business, House of Representatives 
 
March 16, 2022 
PAYCHECK PROTECTION PROGRAM 
Program Changes Increased Lending to Smaller and 
Underserved Businesses  
What GAO Found 
The Paycheck Protection Program (PPP) supported small businesses through 
forgivable loans for payroll and other eligible costs. Early lending favored larger 
and rural businesses, according to GAO’s analysis of Small Business 
Administration (SBA) data. Specifically, 42 percent of early loans (approved April 
3–16, 2020) went to larger businesses (10 to 499 employees), although these 
businesses accounted for only 4 percent of all U.S. small businesses. Larger 
businesses were more likely to have a preexisting lending relationship with a 
bank. Businesses in rural areas also received a high share of early loans despite 
being traditionally underserved.   
Other traditionally underserved businesses—in particular, businesses owned by 
self-employed individuals, minorities, women, and veterans—faced challenges 
obtaining loans, prompting Congress and SBA to make a series of changes 
shortly after the program launched. For example:  
• 
SBA admitted about 600 new lenders, including nonbanks (generally, lending 
institutions that do not accept deposits).  
• 
SBA developed guidance helping self-employed individuals participate in the 
program. 
• 
SBA targeted funding to minority-owned businesses in part through 
Community Development Financial Institutions. 
Lending to traditionally underserved businesses increased noticeably after these 
changes were implemented. By the time PPP closed in June 2021, lending in 
traditionally underserved counties was proportional to their representation in the 
overall small business community (see figure). While lending to businesses with 
fewer than 10 employees remained disproportionately low, it increased 
significantly over the course of the program. 
Paycheck Protection Program Loans, by Type of Business or County 
 
View GAO-22-105788. For more information, 
contact William B. Shear at (202) 512-8678 or 
shearw@gao.gov. 
Why GAO Did This Study 
The COVID-19 pandemic resulted in 
significant turmoil in the U.S. economy, 
leading to temporary and permanent 
business closures and high 
unemployment. In response, in March 
2020, Congress established PPP 
under the CARES Act and ultimately 
provided commitment authority of 
approximately $814 billion for the 
program over three phases. When 
initial program funding ran out in 14 
days, concerns quickly surfaced that 
certain businesses were unable to 
access the program, prompting a 
series of changes by Congress and 
SBA.  
This testimony addresses (1) which 
small businesses received early PPP 
loans and (2) how program changes 
affected small business participation in 
PPP. It is based on GAO’s September 
2021 report on PPP (GAO-21-601). 
For that report, GAO analyzed loan-
level PPP data from SBA and county-
level data from the U.S. Census 
Bureau.

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