By Elizabeth Dilts Marshall and Michelle Price
NEW YORK/WASHINGTON (Reuters) – JPMorgan Chase & Co <JPM.N> said it has submitted roughly 220,000 applications worth $17.8 billion to the Small Business Administration’s Paycheck Protection Program to help small businesses hurt by the coronavirus shutdown.
The bank shared the number in a memo sent to customers late on Wednesday that was apparently meant to address a decision by the government to temporarily shut the program to big banks. In an email to Reuters on Thursday, JPMorgan said the average loan size was around $81,000, and roughly half of the applications were filed by businesses with fewer than five employees.
About 80% of the applications, which were submitted earlier this week, were for less than $100,000 and about 40% were for less than $25,000, the bank said.
The SBA said that as of 5 p.m. EDT on Wednesday, 5,300 lenders had originated 960,000 loans worth nearly $90 billion in total, suggesting JPMorgan could account for nearly 20% of the value of all loans submitted as of Wednesday.
However, big banks say they are still in the dark about the status of one-off bulk submissions of 5,000 or more loans they made this week as a result of a last-minute change to the submission rules. The SBA is processing those for the banks to reduce strain on the system, but it remains unclear if they have been approved, banks said.
The SBA did not immediately respond to a request for comment on Thursday.
JPMorgan’s memo followed a decision by the SBA and U.S. Treasury to shut banks with more than $1 billion in assets out of the SBA’s loan processing portal from 4 p.m. EDT until midnight on Wednesday, in order to ensure “fair access,” they said.
The SBA move aimed to address worries that small lenders which predominantly serve minority-owned businesses would have to compete with big banks for the program’s more than $310 billion in funds after they exhausted money ring-fenced for them on Tuesday.
The decision angered big banks, which are sitting on hundreds of thousands of applications from small businesses and which had been criticized by policymakers for failing to get funds to needy clients during the program’s first round.
Created as part of a $2.3 trillion congressional economic relief package, the program allows small businesses hurt by the epidemic to apply for government-guaranteed, forgivable loans with participating banks.
Wednesday’s announcement was the latest twist for the program, which has been beset by technology and paperwork issues and subject to intense scrutiny due to worries the money was not getting to the most-deserving companies.
During a second round announced on Monday, Congress ring-fenced $30 billion of the funds for banks with less than $10 billion in assets and other community lending groups that predominantly serve minority-owned businesses, amid fears that the country’s biggest banks would suck up the funds.
With so much pent-up demand, that pot of cash was exhausted just one day later, sparking worries businesses owned by people of color may miss out on the loans.
(Reporting by Elizabeth Dilts Marshall in New York and Michelle Price in Washington; Editing by Andrea Ricci and Matthew Lewis)