Could Bypass The Standard PPP Application Process
April 23, 2020
A New York Times report says wealthy clients received preferential treatment in applying for the Paycheck Protection Program offered by the Small Business Administration. That’s presented as evidence that the program wasn’t first-come, first-served as intendent.
The story reported some of the nation’s biggest banks, including JPMorgan Chase and Citibank, prioritized the applications of their wealthiest clients before turning to other loan seekers, according to half a dozen bank employees and financial industry executives who spoke on the condition of anonymity because they were not authorized to discuss the banks’ operations.
Customers of Citi’s private bank, where the minimum account size is $25 million the Times said, didn’t have to use an online portal to apply for a loan; they could simply submit paperwork to their banker, who would put in an application on their behalf. At Chase, the nation’s largest bank, nearly all private and commercial banking clients who applied for a small-business loan got one, whereas only one out of every 15 retail banking customers who sought loans was successful.
The two-tiered system paid off for well-to-do customers: By the time the Paycheck Protection Program ran out of money last week, many top clients of national and regional banks had already had their loans approved.
Other business owners were left empty-handed, and many had struggled from the start. At Chase, a portal accepting preliminary requests to apply was only sporadically accessible on April 3, the first day of the program. The best that customers could hope for was a call back from a Chase representative — days later — to proceed with the next steps.
And a full week after the program’s introduction, Citi’s website was offering retail customers only a chance to submit their names and contact information to express their desire to apply for the program. The bank then reached out to some, but not all, of those customers to invite them to submit full applications; thousands of people never got to apply.
The first tranche of money was distributed in a way that favored larger businesses, according to data from the Small Business Administration. Loans of more than $1 million made up just 4 percent of those approved, but they sucked up 45 percent of the dollars disbursed.
Read the New York Times story.
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