PPP SMALL BUSINESS LOANS: How $525 billion in coronavirus-linked loans were spread across lenders, states, and industries

• This is an update to our May and July PPP Small Business Loans reports. You can purchase all three reports now for the price of one.
• This report outlines the final numbers after the second tranche’s summer expiry, and will be available for free to those who have purchased any of the two preceding versions of this report.
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In April 2020, the US government launched the historic Paycheck Protection Program (PPP) for banks to provide financial assistance to small businesses struggling amid the COVID-19 pandemic. A staggering $659 billion was allocated to the PPP across two separate installments, with funds for the $349 billion first round being tapped out in less than two weeks. But uptake slowed during round two as larger businesses returned loans following public outcry, while complex requirements and murky loan forgiveness guidelines deterred small businesses from applying. At the program’s close on August 8, 2020, $134 billion was left undrawn.

Banks that acted decisively in deploying PPP loans stood to earn new clients and goodwill from regulators, as well as a slice of billions in loan fees. Despite early missteps, they achieved much of what they set out to do, getting $525 billion of much-needed aid to US small businesses. Some banks had hitches in their PPP loan applications, funds weren’t going to the areas that needed them the most, and larger loans were favored by several institutions—but most of these issues were mitigated or rectified by the end of the program in August. Now their objective has pivoted to processing loan forgiveness applications, a task that might be even more strenuous than approving loans.

The PPP was more successful in getting funds to hard-hit states during the second installment, though it had a mixed track record of reaching the hardest-hit industry sectors. In some industries, significant need for funds was matched with higher supply, such as in healthcare. But some of the most impacted industries, like accommodation and food, didn’t get the level of relief they needed.

Below are highlights from some of the top PPP approved lenders:

JPMorgan Chase ($29.35 billion loaned)

Chase came out on top in terms of total approved sums, while also achieving relatively low average loan size. It was the biggest distributor, having approved a total of $29.35 billion as of August 8. Its average loan size of $104,760 is just over the program’s overall average of $101,000—this is particularly impressive when compared with its average loan size of $515,304 in the PPP’s first tranche.

Bank of America (BofA) ($25.56 loaned)

BofA had relatively low shares of PPP loan volume compared with their shares of the US small- and medium-sized business (SMB) lending market. The bank approved 4.6% of the total PPP loan volume, as of June 30, while holding a 9.5% share of the SMB lending market—the largest gap among peers. Yet, this is much narrower than the 8.3 percentage point gap it registered during the PPP’s first tranche.

BMO Harris ($4.84 billion loaned)

BMO Harri had the highest average loan size among top lenders. At $219,888, the bank beat out peers KeyBank, and M&T Bank, but did a better job in reducing its average loan size versus the PPP’s first installment.

Cross River ($6.55 billion loaned)

By far the smallest bank among top lenders, New Jersey-based Cross River managed to approve a whopping 66% of its total assets. It approved $6.55 billion in loans with an average loan size of $32,960, making it the bank with the lowest average loan size among top lenders. The community bank has expertise in processing low-value loans, and its impressive performance was supported by its partnerships with fintechs such as Kabbage and QuickBooks.

Wells Fargo ($10.60 billion loaned)

After Cross River, Wells Fargo had the second lowest average loan size of $54,501, having approved $10.60 billion in loans. Of note, the banking giant had come under fire after the first round of PPP for its low participation in the program, while its earnings filing submitted on May 5 revealed it is facing class actions lawsuits, as well as inquiries from federal and state governmental agencies regarding its PPP loan practices. But it seems that the bank has made significant efforts to alleviate concerns that it potentially prioritized larger loan amounts.

Best PPP Lenders

In PPP Small Business Loans—the final of three updates—Insider Intelligence looks at how different lenders fared at implementing the PPP. The companies mentioned in the report include: Bank of America, BMO Harris, Citibank, Cross River Bank, JPMorgan Chase, Kabbage, KeyBank, M&T Bank, PayPal, PNC Bank, Truist Bank, U.S. Bank, and Wells Fargo.

This report begins by examining the available data on PPP lenders’ approval patterns and providing insights into how loans were spread across top lenders, geographies, and industries as of the program’s end on August 8. We assess the program’s overall effectiveness in distributing aid to US small businesses, and look ahead to potential future initiatives as the pandemic continues.

In full, the report:

• Combines official Small Business Administration data with additional sources, such as company filings and earnings calls, an academic paper, and analyst research, to generate insights into how different lenders fared at implementing the PPP as of its close on August 8.
• Looks into PPP loan sizes and total fees gained by lenders, and examines total funded loans and average loan amounts for the top PPP lenders.
• Provides key takeaways from the analysis of approved loan figures by industry and geography.

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