The COVID-19 pandemic has been a widespread and prolonged disruption to life in the U.S. since a national emergency was declared on March 13, 2020. Small businesses saw substantial revenue declines in the initial months. Expenses also declined commensurately, reflecting lower revenues as well as efforts to preserve liquidity. The signature program for small businesses was the Paycheck Protection Program (PPP), which distributed nearly $800 billion in 2020 and 2021 through 11.8 million loans to small businesses nationwide. Our research brief offers insights about two features of the PPP: the large number of relatively small loans and the duration of what was initially short-term relief.

We analyzed the magnitude and duration of any effects the PPP had on business operating activity, as measured by expenses. Our findings shed light on the effects of smaller loans, in contrast to other studies focusing on loans greater than $150,000. Nearly 69 percent of PPP loans in 2020 and 87 percent of those in 2021 were $50,000 or less. We found that upon receipt of PPP funds, small business expenses increased by over 40 percent relative to a control group, with significant but declining effects over four months.

Figure 1: Effect of PPP loans on small business expenses among 2020 recipients

Bar chart showing the estimated effect of PPP on small business expenses compared to the control group. Chart shows the estimates as the number of months since PPP receipt on the x-axis, and ranges from 0 to 4 months. In the month of PPP receipt, expenses increased by 42 percent relative to the control group, followed by 25 percent, 11 percent, 6 percent, and 3 percent in the subsequent four months.

Source: JPMorgan Chase Institute

We also found that the effects were larger among the smallest firms, perhaps because they were more liquidity constrained than larger ones. This research will help policymakers evaluate the large fiscal expenditure required to support the program and provide insight to the design considerations of future relief programs. Click here to read more.

Figure 2: Effect of PPP on small business expenses by firm size within May cohort

Bar chart showing the effect of PPP on small businesses in the May cohort sized by 2019 expenses for the first and fourth quartiles from April 2020 to August 2020. Small businesses in quartile 1 have changes to expenses that are 8 percent higher than the control group in April 2020, and small businesses in quartile 4 have changes that are 19 percent higher than the control group in April 2020. Expenses for small businesses that received PPP in the first quartile of 2019 expenses increased by 61 percent more in May 2020 than the control group, expenses for small business that received PPP in the fourth quartile of 2019 expenses changed by 38 percent more in May 2020 than the control group. The differences in effects between small businesses in both quartiles 1 and 4 and the control group diminish over the next four months.

Source: JPMorgan Chase Institute

Key Findings: 

Finding 1: Upon PPP receipt, small business expenses increased by over 40 percent relative to a comparison group, with significant but declining effects over four months.

Finding 2: The impact of PPP loans on expenses was largest in April and May 2020, when small business expenses were particularly depressed.

Finding 3: The smallest firms experienced larger spending effects upon loan receipt, perhaps because they were more liquidity constrained than larger firms.

Finding 4: Restaurants may have used PPP loan proceeds to frontload expenses.


We thank Nicholas Tremper and Noah Forougi for their hard work and vital contributions to this research. Additionally, we thank Emily Rapp and Robert Caldwell for their support. We are indebted to our internal partners and colleagues, who support delivery of our agenda in a myriad of ways, and acknowledge their contributions to each and all releases.

We would like to acknowledge Jamie Dimon, CEO of JPMorgan Chase & Co., for his vision and leadership in establishing the Institute and enabling the ongoing research agenda. We remain deeply grateful to Demetrios Marantis, Head of Corporate Responsibility, Heather Higginbottom, Head of Research & Policy, and others across the firm for the resources and support to pioneer a new approach to contribute to global economic analysis and insight.


This material is a product of JPMorgan Chase Institute and is provided to you solely for general information purposes. Unless otherwise specifically stated, any views or opinions expressed herein are solely those of the authors listed and may differ from the views and opinions expressed by J.P. Morgan Securities LLC (JPMS) Research Department or other departments or divisions of JPMorgan Chase & Co. or its affiliates. This material is not a product of the Research Department of JPMS. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. The data relied on for this report are based on past transactions and may not be indicative of future results. The opinion herein should not be construed as an individual recommendation for any particular client and is not intended as recommendations of particular securities, financial instruments, or strategies for a particular client. This material does not constitute a solicitation or offer in any jurisdiction where such a solicitation is unlawful.

Suggested Citation

Wheat, Chris and Chi Mac. 2021. “Did the Paycheck Protection Program Support Small Business Activity?”JPMorgan Chase Institute.


Chris Wheat

President, JPMorganChase Institute

Chi Mac

Business Research Director