State-chartered banks were main distributors of PPP loans, CSBS research finds

New research from the Conference of State Bank Supervisors (CSBS) has found that state-chartered banks were the primary distributor of Paycheck Protection Program (PPP) relief funds to communities.

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In its analysis, CSBS matched recently available loan-level PPP data with lender demographic data, providing the first estimate of how different types of lenders originated PPP loans for small businesses.

“This analysis puts numbers to what we heard from our supervised institutions about the strong relationships they have with their local citizens,” said Texas Banking Commissioner Charles Cooper, who leads the CSBS Covid-19 Recovery Steering Group. “It is more proof that state-chartered banks are crucial to their communities in times of economic stress. The success of the PPP program would not have been possible without them.”

Specifically, the analysis revealed that state-chartered banks provided 51 percent of all PPP funding by dollar volume and 42 percent of total PPP loans by number. Further, state-chartered banks saved more than 50 percent of the estimated 66-plus million jobs saved by the program. In addition, state-chartered banks were the predominant force in PPP lending to rural areas, providing 65 percent of all PPP funding by dollar volume to small businesses in rural areas. Finally, state-charted banks provided 50 percent of all PPP funding by dollar volume in low-to-moderate income areas.

The CSBS is the national organization of bank regulators from all 50 states, American Samoa, District of Columbia, Guam, Puerto Rico and U.S. Virgin Islands.