As small businesses struggled to remain open during the COVID-19 pandemic, programs such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) provided critical funding to cover operating costs and cushion the economic impact.

Research by Public Policy and Economics professor Robert Fairlie, cited in a recent MPR News article, shows the number of active business owners fell sharply from 15 million to 11.7 million, while the national unemployment rate surged to 14.8 percent. PPP loans were rapidly distributed to prevent possible crises, but this also gave rise to opportunities for fraud and error. In Minnesota, for example, 6,900 borrowers were recently suspended amid suspected fraud investigations.

While experts in the field note that there was not enough administrative infrastructure to properly screen loan applications, many believe that the possible crises that could have occurred made the trade-off between helping small businesses stay open and the possibility of fraud worth the risk.