Disparities in the Distribution of Paycheck Protection Program Funds in California’s Congressional Districts

The necessary lockdowns to reduce the spread of COVID-19, along with the ensuing reduction in consumer demand, have created huge economic challenges for small businesses, especially those owned by Latino or Black business owners. To prevent a massive wave of layoffs and small business closures, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included over $600 billion for the Paycheck Protection Program (PPP).In this brief, done in collaboration with UCLA Latino Policy & Politics Initiative, we study the distribution of PPP loans across California’s 53 congressional districts, with an emphasis on the impacts of the distribution of funds on racial equity. We provide findings for three analyses. First, we study the baseline economy in each congressional district to understand any pre-existing inequities in terms of jobs and payroll provided by small businesses. Second, we analyze the ethnoracial composition and socioeconomic status of the congressional districts, grouped by level of PPP support. This allows us to compare the pre-pandemic differences in the economic dynamism of congressional districts with different racial or ethnic compositions. Third, we evaluate PPP’s effectiveness in terms of retaining jobs and maintaining payroll to determine the extent to which the program supported congressional districts with different racial or ethnic compositions