US banks make $10 billion processing coronavirus rescue loans

  • October 20, 2020 12:21 PM PDT
    US banks earned $10 billion in two weeks processing the loans from the
    government scheme to protect small businesses from financial ruin during
    the coronavirus crisis, according to an NPR report.The rescue plan
    worth $349 billion offered businesses loans of up to $10 million to
    thousands of US companies and were guaranteed by the federal Small
    Business Administration.The banks charged a transaction fee of 5% on
    loans worth less than $350,000, while on loans worth between $2 million -
    $10 million, the cost was 1%.The banks defended the massive windfall of
    loan transaction fees, saying that processing the loans involved
    complicated vetting procedures.Treasury Department guidelines are less
    rigorous than for regular loans, and the taxpayer provides the funding,
    so there is little risk for the banks.Visit Business Insider's homepage
    for more stories.To get more news about [url=https://www.wikifx.com/]WikiFX[/url], you can visit wikifx official website.

      Banks have earned a quick $10 billion processing US government loans
    to small businesses affected by the coronavirus crisis, according to a
    new report.The $350 billion rescue program aims to funnel cash to small
    businesses distressed by the economic blows of the COVID-19 crisis.In
    two weeks, banks including JP Morgan, Bank of America, and PNC Bank
    vetted thousands of applications for federal loans of up to $10 million.
    Transaction charges start at 5% for loans under $350,000, reducing to
    1% for loans between $2 and $10 million, according to NPR.The loans are
    guaranteed by the government, and the guidelines issued by the Treasury
    Department indicate that they require less vetting than regular loans.
    There is no risk to the banks which are merely the middlemen.

      The banks have defended the costs, arguing the vetting process for
    each loan can still be complex. In an email statement seen by NPR, Bank
    of America said the program included “collecting, personally examining,
    and storing data” that is required for each application.One example
    highlighted by NPR was on April 7, when the parent company of Ruth's
    Chris Steak House, RCSH Operations LLC, received a loan of $10 million.
    JPMorgan Chase & Co., took a $100,000 fee on the one-time
    transaction for which it assumed no risk.The scheme, known as the
    Payment Protection Program (PPP), exhausted its funds last week. Aimed
    at small businesses with less than 500 employees, it was hit with
    controversy as larger companies exploited loopholes to tap into it.

      Some large, well-funded companies were granted millions of dollars
    from the $350 billion pool of funding, while many small, mom-and-pop
    shops were unable to access any funding at all, sparking public
    outrage.The initial PPP funding was snapped up in less than two weeks.
    Congress has now approved an additional $310 billion and new loans will
    be issued again starting next week.