The Implementation of Paycheck Protection Program on the Recovery of Restaurant Industry in COVID-19

The epidemic has had a significant negative impact on many industries that rely on foot traffic for profit, with the restaurant industry being the most representative. The government also implemented different levels of lockdowns and subsidies at the beginning of the outbreak to control the spread of the epidemic while subsidizing the affected companies. This paper analyzes the extent to which the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security Act (CARESA) for small companies helped the restaurant industry. Even with the limitations of incomplete information on small companies, the results indicate that the first round of the PPP loans helped the restaurant industry's transaction rate, but many restaurants decided to lay off employees because they did not receive follow-up subsidies. Therefore, it is inferred that the help of the PPP is phased, bringing significant boost effect immediately but not sustaining long-term economic recovery. This analysis also provides the basis for a more effective and applicable emergency relief program in the future.