We assess the role of banks in the Paycheck Protection Program (PPP), a large and unprecedented small-business support program instituted as a response to the COVID-19 crisis in the United States. In 2020, the PPP administered more than $525 billion in loans and grants to small businesses...

The Paycheck Protection Program (PPP) administered hundreds of billions of dollars of loans and grants to small business through private banks. In this paper, we explore the optimal allocation of funds across firms, the distortions caused by allocating these funds through the banking system, and...