In April, the US government launched the historic Paycheck Protection Program (PPP) to provide financial assistance to small businesses struggling amid the pandemic.
Business Insider Intelligence
This program has so far totaled a staggering $659 billion across two separate installments. Funds for the $349 billion first round were tapped out in less than two weeks.
The PPP represents an extraordinary step to solve an unprecedented challenge faced by small businesses, and banks that act decisively in deploying PPP loans stand to earn new clients and goodwill from regulators, as well as a slice of billions in loan fees.
But earning these rewards is no simple task: Banks are expected to process and approve a flurry of loans on a rapid timeline, while processing applications on a first-come, first-served basis.
And while regulators, lawyers, and the media alike have charged banks with being too slow to accept applications, prioritizing existing clients, and favoring larger loan amounts, banks are concerned that rapidly approving a large number of loans to unfamiliar businesses could allow fraud to proliferate in PPP loans, creating more backlash down the line.
In PPP Small Business Loans, Insider Intelligence looks at how different lenders fared at implementing the PPP during its first round by examining the available data on PPP lenders’ approval patterns and providing insights into how loans were spread across top lenders, geographies, and industries. Further, an update to this report will add insight into the second PPP round launched on April 27, and will be available for free to those who have purchased the initial version of this report.
The companies mentioned in the report include: Bank of America, BMO Harris, Citibank, Credibly, Frost Bank, Funding Circle, JPMorgan Chase, KeyBank, Lendio, M&T Bank, PayPal, PNC, Ready Capital, Square, Truist Bank, U.S. Bank, Wells Fargo, Zions Bank.
Here are a few key takeaways from the report:
- PNC, Chase, and Truist were the top three lenders by approved sums in the first round. A factor behind this is that Chase and PNC had the highest average loan sizes, at $515,304 and $456,371, respectively, compared with the first round’s average of $206,000.
- Chase, Bank of America, and BMO Harris had a relatively low share of PPP loan volume, given their share of the SMB lending market. On the other hand, banks like PNC Bank and KeyBank punched outside their weight and could stand to gain a larger market share of SMB lending going forward.
- Nonbank Ready Capital approved the most PPP loans at 40,746, followed by KeyBank and Truist. Ready Capital’s ability to approve more loans is explained by its focus on smaller businesses, as well as its partnership with fintech lender Lendio, underscoring how fintechs can…