Small Business and the Covid-19 Pandemic

This chapter explores the impact of the Covid-19 pandemic on small businesses in the United States. It describes the economic shock of the pandemic and the resulting lockdowns that severely affected many small businesses. The chapter then examines the urgent and unprecedented federal response, focusing on the Paycheck Protection Program. This massive effort distributed over $800 billion to millions of small businesses through banks and newly engaged fintech lenders. The program evolved through several rounds of funding to improve distribution and equity, though some flaws emerged including fraud. Overall, the program helped small businesses survive the crisis and maintain better levels of employment than expected. This success provides insights into how technology and partnerships between traditional and new players might improve small business lending in the future.