NEW YORK–“Millions” of small business owners could be looking to leave big banks and switch financial institutions following their experiences in filing Paycheck Protection Program loan applications, according to one new report.
According to a study by research firm Greenwich Associates, more than one in five small businesses unhappy with their PPP experience plan to switch banks.
“It’s clear that the frustration from some companies and business owners has driven them to the switching point,” Greenwich Associates CEO Steve Busby told Crain’s New York. “If business owners did not know what it meant to be a borrowing customer or have loyalty from their bank, they do now.”
Greenwich estimates that more than six-million small and midsize businesses could switch banks, according to Crain’s. “That would put a vast amount of money in motion, because the companies hold $290 billion in their checking accounts, have $350 billion in credit balances and produce $4.3 billion in annual checking and cash-management fees for banks,” the report added.
Crain’s, which cited a number of small business owners who shared their frustrations in trying not only to get applications filed but then the inability to get any response on the status of their apps, also spoke with small business owners who said they had more success in filing an application through a smaller bank.
‘Stole the Show’
Small banks—those with less than $10 billion in assets—secured 60% of PPP loans for customers in the first round of funding.
“Community banks stole the show,” analysts at Keefe Bruyette & Woods said in a report, Crain’s New York said
Crain’s added that larger banks seem to have done a better job serving small-business customers in the second round of PPP funding, lining up 53% of the $188 billion approved through May 10, according to the SBA.