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Thursday, Aug 27, 2020

Have US banks made billions of dollars from processing coronavirus relief loans?

Samuel Henning, Gigafact Foundry
yes

Banks have made billions of dollars in fees by processing federally-funded coronavirus relief loans enacted by Congress in March. The Wall Street Journal reported that 4,000 banks could split $14.3 billion to $24.6 billion in processing fees for the "Paycheck Protection Program" loans, intended to help businesses avoid layoffs through the wave of pandemic shutdowns.

Bank of America, the country's second largest bank, made 334,000 loans in the second quarter, averaging $78,000 each. Fees are 5% for loans under $350,000, declining to 1% for the largest sums. The bank says any net proceeds will be used to "support small businesses and the communities and nonprofits we serve." For some smaller banks, the profits are meaningful, but come with legal risks, management headaches and delayed receipts of the fees, which are tied to repayments.

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