By David Benoit and Peter Rudegeair 

JPMorgan Chase & Co. and Bank of America Corp. are in line to split between $1.5 billion and $2.6 billion in fees for being the conduits of the government's aid program for small businesses stricken by the coronavirus shutdown, according to an analysis of newly released data.

The nation's two biggest banks by assets delivered more emergency loans than any other lenders that participated in the Paycheck Protection Program and the two are set to earn the biggest fees as well, according to a review of disclosures made Monday by the Treasury Department and Small Business Administration.

In total, the more than 4,000 lending institutions in the analysis are in line to split $14.3 billion to $24.6 billion in processing fees for PPP loans, according to Edwin Hu, at New York University School of Law's Institute for Corporate Governance & Finance, and Colleen Honigsberg of Stanford Law School.

The PPP has delivered more than $520 billion in loans meant to soften the economic blow of the novel coronavirus. The loans can be forgiven if businesses spend the money on certain expenses like rent or payroll, though businesses have said the process is confusing.

It is common for banks to be compensated for facilitating loans made under government programs. What sets PPP apart is its size: The high end of the range of PPP fees lenders can earn exceeds the total size of the SBA's flagship lending program in the 12 months ended Sept. 30.

Banks have said they don't expect sizable profits for the program. Getting their systems up-and-running quickly required diverting thousands of workers to help with applications and building new software to manage the process.

In addition to the program's fees, banks are also set to earn 1% in interest on PPP loans they hold that aren't forgiven, not much more than their cost of funds. The SBA guarantees the loans, protecting banks against defaults.

Big banks including JPMorgan, Bank of America and Wells Fargo & Co. have said they would donate whatever profits they make on PPP.

"We will use the net proceeds of support small businesses and the communities and nonprofits we serve," a Bank of America spokesman said.

The fees banks earn depend on the size of the loans they make: 5% for loans less than $350,000; 3% for loans between $350,000 and $2 million; and 1% for loans north of $2 million.

If the SBA later determines a borrower was ineligible for a PPP loan, it can claw back the processing fee from the lender.

More than 30 banks, mostly smaller ones, could earn as much from the PPP loans as they reported in net revenue for all of 2019, according to a separate analysis from S&P Global Market Intelligence.

The government released exact loan sizes only for loans of less than $150,000. The remaining loans were placed within several buckets. Ms. Honigsberg and Mr. Hu tallied the exact fees for those loans under $150,000 and the potential range for every other loan.

JPMorgan customers received $29 billion in PPP loans and the bank stands to get between $800 million and $1.38 billion in fees, according to the analysis. Bank of America customers received $25 billion in loans, and the bank is in line for $770 million to $1.21 billion in fees.

Write to David Benoit at and Peter Rudegeair at


(END) Dow Jones Newswires

July 07, 2020 11:22 ET (15:22 GMT)

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