Wells Fargo to donate $400 million in PPP fees to small business recovery effort

Danielle Chemtob
·2 min read

Wells Fargo detailed plans Thursday to donate $400 million in processing fees it earned from the Paycheck Protection Program to an initiative it says will help small businesses recover from the impacts of COVID-19.

In April, NPR reported that banks took in over $10 billion in fees from the federal government for handling the Paycheck Protection Program, which is administered by the Small Business Administration and designed to provide relief for small businesses.

The bank announced its recovery effort, the “Open for Business” fund, in a news release Thursday morning.

The fund will work with nonprofits that provide capital, technical support and programs for resiliency, for example by helping a business pivot its supply chain, said Jenny Flores, head of Small Business Growth Philanthropy for the bank.

The first round of funding will give $28 million to community lenders known as Community Development Financial Institutions that help Black-owned small businesses, Wells stated in the release.

According to the National Bureau of Economic Research, the number of Black business owners declined by 41% between February and April, compared to a 22% drop overall in the number of business owners.

“We are giving some priority to those that have been hardest hit,” Flores said.

Of the $400 million, $250 million in total will go to CDFIs, the bank said, and the rest will go to other nonprofits that work with small businesses.

The application cycle for CDFIs opened Thursday, and future grant rounds will open in September and in 2021, the bank said.

Wells Fargo is one of several banks that has been accused in a series of class-action lawsuits of sending larger loans to the SBA ahead of smaller ones to maximize profits. The bank also disclosed in a May securities filing that it had received formal and informal inquiries from federal and state agencies over how it handled the PPP loans.

A spokesman for the bank said it does not comment on pending litigation.

Through June 30, Wells Fargo funded PPP loans for more than 179,000 customers, the bank said in the release. Of the loans, 84% were for companies with fewer than 10 employees.