Small Business Rescue Earned Banks $10 Billion In Fees
April 22nd, 2020Via: NPR:
Banks handling the government’s $349 billion loan program for small businesses made more than $10 billion in fees — even as tens of thousands of small businesses were shut out of the program, according to an analysis of financial records by NPR.
The banks took in the fees while processing loans that required less vetting than regular bank loans and had little risk for the banks, the records show. Taxpayers provided the money for the loans, which were guaranteed by the Small Business Administration.
According to a Department of Treasury fact sheet, all federally insured banks and credit unions could process the loans, which ranged in amount from tens of thousands to $10 million. The banks acted essentially as middlemen, sending clients’ loan applications to the SBA, which approved them.
For every transaction made, banks took in 1% to 5% in fees, depending on the amount of the loan, according to government figures. Loans worth less than $350,000 brought in 5% in fees while loans worth anywhere from $2 million to $10 million brought in 1% in fees.
