How Ruth's Chris Steak House Snagged a $20,000,000.00 SBA Loan

If you are like most of America’s small business owners you are still trying to figure out how Ruth's Chris Steak House snagged a $20 million dollar CARES Acot PPP forgivable loan and you missed out. 

No it’s not Donald Trump’s cronies who got all the money and frankly it is worse than that. The best guess is about 3 -15 billion went to publically traded companines who by all accounts should be able to withstand the short term COVID-19 shutdown.

Here’s what our country’s largest banks did with the PPP funding. Using the code words “protect the balance sheet” the big banks like Wells Fargo, Bank of America, Chase and even super regionals like Truist, went about processing Paycheck Protection Program loans for their largest commercial customers first. 

Across the nation banks with “in house” SBA teams, told their SBA lenders to “Stand Down” pulling their most experienced small business lenders off the field. 

Rather than helping their existing small business loan customers these banks put their effort into getting the stimulus money to those clients with big deposit accounts and large commercial “Non SBA” loans. The goal to “protect the bank’s balance sheet”. 

Internal memos show knowledgeable SBA loan officers within these banks begging for access to PPP loans, with senior management repeatedly telling SBA staff that they would wait until all large deposit customers were approved. 

But why? Once the SBA announced they would make the monthly payment, both interest and principle, for all regular servicing SBA loans during the next 6 months, the solvency of those loans was secure. 

With the concern of massive SBA loan defaults covered, the big banks concocted a plan to shore up their balance sheet and protect their deposit base. After all why have your largest and best customers drain their checking accounts when the US Treasury is offering free money?

Six days into the process; Bank of America, Chase, Wells Fargo and others had processed nearly 200 billion dollars in government loans for their best and largest customers and yet not a dime for small businesses with shuttered store fronts on Main Street. 

Internal memos put emphasis on big loans to financially strong customers with the banks pulling credit reports, requesting tax returns and corporate status checks, on the smaller customers even though they were not required by the SBA. 

These same memos set the minimum size loan at $35,000 even though there was no minimum set by Congress or the SBA, further shutting out and hurting true small businesses the CARES Act was intended to help. 

The nations’ largest banks ignored the first come first served guidance. The incentive to process smaller loans with bigger fees paid by the SBA was little enticement for big banks to issue loans under $100,000.00. 

A week after the PPP became operational most banks’ SBA customers had not even been offered an application for the low interest forgivable loan. 

Wells Fargo and Chase cited internal delays in going live with their online loan applications for the small loan customers. But away from the electronic portal offered small business clients, big banks were manually cranking out the paperwork and securing SBA loan numbers for hundreds of their largest customers by the second.

In the end, for Nation’s largest customers the COVID -19 Disaster is business as usual with an added financial cushion in the bank thanks to US taxpayers and at the expense of the nation’s SBA borrowers. 

The small business owners who were loyal to BofA and Wells Fargo and Chase were thrown under the proverbial bus. 

And the message to Americas’ small business owners?  

Up Yours!