U.S. banks set to make billions from small business stimulus measures
Topics: U.S. BANK
Under the scheme the full amount of any loan authorised by the SBA will be forgiven if it is used for wages, rent and utilities in the two months after it is received, with any amount not forgiven accruing interest at a rate of 5 percent and repayable after two years.
As the Financial Times (FT) reported earlier this week: “Banks stand to collect billions of dollars in fees on the $350 billion in loans that are being offered to US small businesses.”
The SBA does not hand out the money directly but makes it available through banks and credit unions. They pick up a fee, provided by the federal government, for the service.
The fees will vary according to the size of loan. It will be 5 percent for loans under $350,000, 3 percent for loans under $2 million and 1 percent for loans greater than $2 million.
With $350 billion to be disbursed and the lowest fee to be charged set at 1 percent, there are clearly several billions of dollars up for grabs. ■