Of the $800 billion allocated to small businesses through the Paycheck Protection Program (PPP), a mere 25 percent trickled down to workers, according to a report from the St. Louis Federal Reserve Bank. The majority of funds instead went to benefit suppliers, creditors and business owners. While the Fed notes that the PPP may have helped keep small businesses from shuttering, its effectiveness at preserving wages was not only limited but came at a high price. This outcome was likely unavoidable, however, due to both the parameters of the program and a lack of supportive structural systems.The PPP was a temporary program implemented as a part of the CARES Act, the initial federal response to the COVID-19 pandemic. The program aimed to prevent small business closures and accompanying job losses through forgivable, uncollateralized loans — funneling up to $10 million each to firms with under 500 workers. The funds were not earmarked solely for wages and benefits and instead were available to cover other costs related to maintaining employment levels such as utilities and rent or mortgage. The only requirement borrowers faced to having the loans fully forgiven was to attest that funds had been used appropriately within the time allowed, so it’s no surprise that the bulk — 90 percent — were forgiven as of June 20th this year.
But were any jobs actually saved? According to the report, yes. Just under three million jobs were saved each week in the second quarter of 2020, …