Did the Paycheck Protection Program Help Small Businesses? Evidence from Commercial Mortgage-backed Securities

We examine the effects of the Federal government’s Payment Protection Program (PPP) on the performance of securitized commercial mortgages following the coronavirus pandemic. Using de- tailed administrative data that allows us to observe variation in mortgage performance by loan size, we find that, in the absence of the PPP, the delinquency rate of small commercial mortgages could have been an average of 2 percentage points greater than the actual delinquency rate, which peaked at 9% during the pandemic. We also find a differential effect between the first and second round funding with the strongest impact during the program’s second round when funding was targeted to businesses in areas most impacted by COVID-19. Thus, our analysis suggests that the PPP did help small businesses, but policymakers should attempt to ensure that future PPP funds are targeted to businesses in the most affected areas.