NEW YORK (Reuters) – JPMorgan Chase & Co (JPM.N) said on Wednesday that it had submitted roughly 220,000 applications worth $17.8 billion to the Small Business Administration’s Paycheck Protection Program to help small businesses hurt by the coronavirus shutdown.
FILE PHOTO: The logo of Dow Jones Industrial Average stock market index listed company JPMorgan Chase (JPM) is seen in Los Angeles, California, United States, in this October 12, 2010 REUTERS/Lucy Nicholson
In a client memo that appeared aimed at rebutting a decision by the government to temporarily shut the program to big banks on Wednesday, JPMorgan said the average loan size was around $81,000, and roughly half of the applications were filed by businesses with fewer than five employees.
About 80% of the applications were for less than $100,000 and about 40% were for less than $25,000, the bank said in an email to customers for whom it had processed loans.
The SBA said that as of 5PM EDT on Wednesday, 5,300 lenders had originated 960,000 loans worth nearly $90 billion in total, suggesting JPMorgan accounted for nearly 20% of the value of all loans processed as of Wednesday.
JPMorgan’s memo followed a decision by the SBA and U.S. Treasury to shut banks with more than $1 billion in assets out of the SBA’s loan processing portal from 4PM EDT until midnight on Wednesday, in order to ensure “fair access,” they said.
The SBA move aimed to address worries that small lenders which predominantly serve minority-owned businesses would have to compete with big banks for the program’s more than $310 billion in funds after they exhausted money ring-fenced for them on Tuesday.
The decision angered big banks, which are sitting on hundreds of thousands of applications from small businesses and which had been criticized by policymakers for failing to get funds to needy clients during the program’s first round.
Created as part of a $2.3 trillion congressional economic relief package, the program allows small businesses hurt by the epidemic to apply for government-guaranteed, forgivable loans with participating banks.
Wednesday’s announcement was the latest twist for the program, which has been beset by technology and paperwork issues and subject to intense scrutiny due to worries the money was not getting to the most-deserving companies.
During a second round announced on Monday, Congress ring-fenced $30 billion of the funds for banks with less than $10 billion in assets and other community lending groups that predominantly serve minority-owned businesses, amid fears that the country’s biggest banks would suck up the funds.
With so much pent-up demand, that pot of cash was exhausted just one day later, sparking worries businesses owned by people of color may miss out on the loans.
Reporting By Elizabeth Dilts Marshall; Editing by Gareth Jones and Andrea Ricci