- US Banks made a quick $10 billion processing the Small Business Administration’s Coronavirus relief loan program.
- The program consisted of $349 billion in loans meant to provide a lifeline to small businesses ravaged by the Coronavirus pandemic.
- Banks made between 1%-5% in fees on each loan they processed for the program.
An NPR report shows that banks made a cool $10 billion in two weeks acting as middlemen in the government’s small business Coronavirus relief program.
The program, which was passed by congress and administered by the Small Business Administration, set aside $349 billion in loans meant to keep small businesses afloat as the economic fallout from the Coronavirus pandemic continues to ravage the US economy.
In order to secure these loans, small businesses could not apply directly with the SBA but had to use one of the private banks participating in the program. For their trouble, these private banks were paid a fee of 1%-5% of the amount of each loan processed.
The banks justified this amount pointing to the labor involved in vetting clients, but amount of vetting and loan criteria were much more lax than in standard business loans. The SBA administers the loans, so banks face no risks and are not affected by potential loan defaults in the future.