Self-Reporting Race in Small Business Loans: A Game-Theoretic Analysis of Evidence from PPP Loans in Durham, NC

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Racial self-identification, the process of identifying as belonging to one racial-ethnic group or another, can be a fraught process that encapsulates many competing factors and incentives.

One research area of particular interest concerns this identification in high-stakes situations, such as applying to college, for a mortgage, or for personal or business loans.

This paper, using data from the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) in the midst of the COVID-19 pandemic, explores how racial self-identification–and, in turn, concealing this information–helps or hurts business owners of different racial-ethnic groups.


Using hand-collected race information of small business owners that concealed their race in Paycheck Protection Program applications, we find evidence that not disclosing race information in loan applications pays off significantly. Our results show that black-owned businesses that concealed their race obtained 52% more in funding than self-reported black-owned businesses. Interestingly, white-owned businesses that also concealed their race information obtained approximately 10% more in funding relative to self-reported white-owned businesses. However, this effect is not statistically significant. Our findings are consistent with a prisoner’s dilemma theoretical framework, in which all participants are better off by not self-reporting race.