Revenue Came From Sliding Scale Depending on Loan Size
April 23, 2020
A report from NPR says banks earned $10 billion nationally from the Small Business Administration’s Paycheck Protection Program that was funded with $349 billion by Congress because of the coronavirus pandemic.
The NPR story said the banks took in the fees while processing loans that required less vetting than regular bank loans and had little risk for the banks, the records show. Taxpayers provided the money for the loans, which were guaranteed by the SBA.
According to a Department of Treasury fact sheet, all federally insured banks and credit unions could process the loans, which ranged in amount from tens of thousands to $10 million. The banks acted essentially as middlemen, sending clients' loan applications to the SBA, which approved them.
For every transaction made, banks took in 1% to 5% in fees, depending on the amount of the loan, according to government figures. Loans worth less than $350,000 brought in 5% in fees while loans worth anywhere from $2 million to $10 million brought in 1% in fees.
Read more about the PPP banking fees.
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