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Joe Nocera

To Get a Small-Business Loan, Try a Smaller Bank

The borrowers who have been happiest with the Paycheck Protection Program used community lenders rather than the national giants.

relates to To Get a Small-Business Loan, Try a Smaller Bank

Photographer: Olivier Douliery/AFP/Getty Images

On Sunday, four of the five largest U.S. banks — Wells Fargo & Co., Bank of America Corp., US Bancorp and JPMorgan Chase & Co. — were accused in several lawsuits of favoring large companies over small ones in handling the federal government’s $350 billion small-business rescue program. The suits are easy to cheer for, given that tens of thousands of small businesses were shut out of the program while a number of publicly traded companies received millions, starting with Ruth’s Hospitality Group Inc., which gamed the system for a $20 million loan, twice the maximum allowed.

But as much as you might want to root for the plaintiffs, the cases are unlikely to go anywhere. The reason is that neither the banks nor public companies like Ruth’s and Shake Shack (which has said it will return its loan) did anything wrong. It is undeniable that there were problems with the Paycheck Protection Program. But now, with the Senate having passed legislation authorizing $320 billion of additional PPP loans — and the House likely to approve the bill in the next day or so — the important thing is to understand what went awry. With any luck, maybe it’ll go better this time around. My advice: Think small.