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updated: 7/22/2020 10:24 AM

Small-business loans saved as many as 3.2 million U.S. jobs

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Hundreds of billions of dollars in government loans to small businesses helped save between 1.4 million and 3.2 million jobs during the coronavirus pandemic, according to a new study by Massachusetts Institute of Technology and Federal Reserve researchers.

The Paycheck Protection Program, a centerpiece of the Trump administration's economic response to the pandemic, boosted employment by 2% to 4.5%, economists including MIT's David Autor wrote in the study posted Wednesday. The preliminary study was based on data from payroll processor Automatic Data Processing Inc. through the first week of June and doesn't analyze PPP data directly.

The research suggests that providing money directly to companies helped curb job losses during the pandemic, though employment remains about 15 million below pre-virus levels. The stimulus program, which has distributed more than $500 billion in loans to small businesses, was set to expire at the end of June before Congress extended it through the beginning of August. Loans, distributed via the Small Business Administration, will be forgiven if companies maintain jobs or rehire laid-off workers and if most of the money goes to payroll.

But the program has been controversial and hasn't worked for everyone. Some companies had trouble applying while others decided not to because they don't expect to be able to rehire workers. The Trump administration has also faced criticism for giving loans to businesses that haven't been hit as hard by the pandemic along with larger, publicly-traded firms.

According to the MIT report, the program "was certainly not perfectly targeted" in reaching companies most in need, but a "substantial" number of companies that were struggling did receive funds