Observations this morning from Larry Kudlow (Director of the U.S. National Economic Council) are that the smaller community and regional banks are outperforming the major banks thus far (including Wells Fargo, Bank of America and Chase Bank) in processing PPP loan submissions. In fact, we can report that our PEO clients that have utilized the smaller banks for submitting their loan requests were getting approval notices over the weekend and yesterday (Monday April 6th). Additionally, we have heard from our clients that have utilized a major bank that they are experiencing delays and frustration in getting the ball rolling.
There are a lot of opinions as to why this is the case, but a few comments and observations are:
- The smaller banks have been far more nimble and responsive,
- The major banks seems to have been focused on the online processes that they were launching for submissions.
- The smaller banks are managing more of the underwriting process using their personal (i.e. human interaction between the bank and the customer as opposed to online submission processes).
- The workload or number of loans being processed by the smaller banks is a lot more manageable than it is for the majors.
- The familiarity of the smaller bank with their clients has helped greatly (i.e. the majors have representatives from around the country addressing loan requests for clients they don’t normally interact with).
Also, we are hearing about “allocation” limits or challenges for some of the major banks (particularly Wells Fargo that reported that they had reached a $10 billion cap for PPP loan issuance). We’ve also been told that some smaller banks have met their allocation limit. With $349 billion set aside for small businesses, there were reportedly $40 Billion+ loans approved as of yesterday afternoon. We’ve heard no word yet on how fast approved loans are being deposited into the small businesses’ bank accounts; however we will continue to keep our clients and blog visitors updated.