By Hadassa Kalatizadeh
When Congress launched the Paycheck Protection Program as part of a $2 trillion coronavirus aid package, everyone expected the big banks to get most of the action. One tiny New Jersey based lender, with net assets of just $2.5 billion made more loans than US megabanks like US Bank, Citigroup, Truist Bank, KeyBanc , and PNC. As reported by the NY Post, Cross River Bank made a whopping 134,472 PPP loans, doling out an estimated total of $5.4 billion in loans. The privately held lender profited $160 million in fees, as per S&P Global, blowing away the bank’s entire net revenue of $96 million from last year. The tech-savvy little lender became the 13th most active of all US lenders participating in the US government’s Paycheck Protection Program. Citi and BNY didn’t even make the top 15. JPMorgan Chase granted the most PPP loans in the country –$29 billion– profiting roughly $864 million in fees. Then again, JP Morgan is the largest of the big four American banks, boasting total assets of US$2.687 trillion and a total of over 250,000 employees.
Cross River Bank of Fort Lee, NJ has only 320 employees, and when the pandemic hit, only 10 of them were underwriters. The bank hired just 22 additional employees during the COVID crisis. The bank, founded in 2008, says it partnered with more than 30 tech firms to create an agile lending platform. While many small banks had its force working 20-hour days, Cross River’s glitch-free hookups with its fintech partners empowered it to process applications at a much faster pace.
Cross River’s Chief Executive, Gilles Gade, said the secret to its PPP success is its DNA as a community bank which serves a community of financial tech companies. A Spokesman for the bank said it will share its PPP earnings with a large number of fintech partners that are clients, including payroll app Gusto, the Kabbage lending platform, payments startup Veem, and Intuit, the maker of the QuickBooks accounting software. Those partners had all directed their customers to Cross River for PPP applications. “We said how much can we automate? Can we partner with tech companies on originations?” recounted the Cross River spokesman, who asked not to be named. “And we thought, if we can, we should.”
When COVID-19 struck, Gade and his team made a conscious decision to dramatically shift almost all its focus into lending PPP government funds to small businesses. Perhaps most remarkable, is the fact that the small bank managed to make such a high volume of loans with the average loan size of less than $40,000, as per The Post. That average loan size is the smallest of any of the large PPP lender by a landslide. While the bank may have capitalized on SBA rules specifying higher fees on smaller PPP loans, it also did help the government achieve its goals of aiding truly small businesses.