Limits to capital: Assessing the role of race on the Paycheck Protection Program for African American farmers in America

Abstract

We examine Paycheck Protection Program (PPP) lending among African American and white farmers. Using data from the U.S. Small Business Administration we run fixed effect estimations with a Mills inverse ratio. Our findings suggest discrimination due to limited capital access. We find statistically significant differences between approved loan amounts among African American farmers due to income level and location of their farms. These had minimal effects on white farmers. Our results call for policymakers to carefully monitor the PPP distribution in areas more vulnerable to financial difficulties. We provide policy recommendations.