Banks earned billions of dollars in fees from processing over 4.5 million Paycheck Protection Program (PPP) loans worth more than $511 billion in the last several months, with the largest haul going to the country’s biggest banks, according to a new U.S. Small Business Administration (SBA) report.
The financial institutions processing coronavirus rescue loans earn fees on a sliding scale based on the total dollar amount approved. Lenders earn 5% on loans of $350,000 or less, 3% on loans between $350,000 and less than $2 million, and 1% for loans of at least $2 million. Additionally, banks will earn a 1% interest rate on loans they hold that are not eligible for forgiveness under PPP rules.
But faced with mounting criticism, some banks say they won’t keep any profits. Instead, they will donate what they have earned after factoring in the cost to process the loans.
Here’s where some of the largest U.S. lenders say their loan cuts will go to after accounting for expenses.
Loans issued as of June 30: 269,424
Amount disbursed: $29,066,127,405
Average loan size: $107,882
The largest bank in the U.S. by asset size, JPMorgan Chase has issued the highest total dollar amount in PPP loans of any bank. Chase’s $28.6 billion in loans would have snagged the banking giant over $800 million in loan processing fees, according to an estimate by S&P Global Market Intelligence. A spokesperson for the bank said the bank won’t realize any gains from the loans.
“We will not make a profit from the program and remain fully committed to supporting underserved communities that have been economically impacted by the pandemic,” a Chase representative told Forbes Advisor. They declined to elaborate.
Bank of America
Loans issued as of June 30: 334,761
Amount disbursed: $25,203,076,316
Average loan size: $75,287
As the second largest U.S. bank by asset size, Bank of America has processed roughly 335,000 PPP loans worth $25.2 billion. Over 80% of those loans were for businesses with 10 or fewer employees.
The bank has pledged to donate all earnings from PPP loan processing fees—estimated to be $755 million according to an analysis by S&P Global Market Intelligence—to community development financial institutions (CDFIs) to reinvest and support charitable programs, including low- to moderate-income housing and small-business assistance.
“We will use the net proceeds of fees from the Paycheck Protection Program to support small businesses and the communities and nonprofits we serve,” a Bank of America spokesperson said.
Loans issued as of June 30: 78,669
Amount disbursed: $13,075,965,877
Average loan size: $166,215
Truist has not indicated that it plans to donate any net proceeds from PPP loan processing. In an April earnings call, the bank said it paid out $65 million in…