Excellent UT paper on the FinTech and fraud with PPP below.
I am not so sure PPP was efficient in staving off unemployment. I see it more as a transfer of wealth to those with bad spending habits and mired in over consumption. Caveat - the data is not there yet for me to conclude the wisdom of directing welfare payments to employers. There was a hell of a lot of welfare fraud by “business owners” under PPP that I naively did not expect.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3906395
In the distribution of the Paycheck Protection Program’s (PPP) $803 billion in funds, FinTech lenders began minimally but ramped up their market share to over 80% of originated loans by the end of the program. We examine metrics related to potential misreporting including non-registered businesses, multiple businesses at residential addresses, abnormally high implied compensation per employee, and large inconsistencies in jobs reported with another government program. We assess these four metrics with five supplemental measures and extensive supporting analysis.
Suspicious loans exhibit sharp and discontinuous increases in misreporting at maximum loan thresholds and round loan amounts with discontinuities more pronounced among FinTechs. FinTech loans are more than 3.5 times as likely to be initiated by someone with a felony record, strongly cluster in industry-county pairs to a degree that is infeasible based on U.S. Census data, and frequently exhibit similar loan features within lender-county pairs. Differences across lenders are persistent with certain FinTech lenders seemingly specializing in questionable loans.
Few of these loans have been prosecuted by authorities or repaid. FinTech lenders in round three rapidly increased both their market share and the fraction of their loans with potential misreporting, particularly in zip codes with the highest levels of questionable lending in earlier rounds. From the first round of the program in April 2020 to the last month of the program in May 2021, the amount of potential misreporting increased more than four-fold. While FinTech lenders likely expand PPP access, this may come at the cost of facilitating fraudulent credit.