JP Morgan Chase Turns Its Back on Small Business Clients

I must admit, the first version of this post had a much stronger title. Here was a golden opportunity for the major money center banks to step up and demonstrate why you should trust them (a/k/a less regulated).  

Unfortunately, greed and self interest once again got the better of Chase when they decided, with all the confusion and distraction of a crashing economy, they'd rather sacrifice you, their small business clients, to take care of themselves and their biggest customers. 

So I think that small businesses should bank elsewhere.

Why Should Small Businesses Leave Chase Behind?  

I spoke with a number of Chase small business clients from across the country with long-term banking relationships with Chase (some dating back to the 1970s) to find out what really happened. 

And it's worse than you think—not only were their loans not processed, the branch offices they worked with were kept in the dark about what was happening.  Many still not knowing, three weeks after submitting their applications, where they stand in line.  

Here are three other reasons Chase doesn't deserve your business.

1. They destroyed your trust

Here’s one thing Chase needs to learn about small business: Trust is everything. 

As Jamie Dimon points out in his recent annual letter to shareholders, he knew exactly what was going to happen if he didn’t get these funds into the hands of his small business clients fast:  

JPMorgan Chase Institute research reveals that 50 percent of small businesses have less than 15 cash buffer days, reinforcing why small businesses are being heavily disrupted by the current crisis and will feel the effects for a significant period of time.  

So, while claiming the process was on a first-come, first-serve basis, Chase decided to serve the needs of larger clients while ignoring small business owners when they needed this financial powerhouse the most.  

2. They told you not to open up applications elsewhere

To make matters worse, clients were told they should not open up applications with other financial institutions if they were going to submit with Chase. 

This caused business owners who had their applications submitted electronically within 10 minutes of the time Chase opened its online portal to sit and wonder why they were not getting any of the $14 billion in loans the bank processed in the first open window of PPP Loan Relief.  

3. They prioritized loans for larger clients

JP Morgan Chase processed only 27,307 loan applications to reach a whopping total of $14 billion in CARES Act Relief. Their average loan size was over $500,0000 (as a reference point, a sole proprietor with $60,000 in annual compensation was entitled to a loan around $12,500 and 10x that for a team of 10 or $125,000).  

In comparison to the other banks in the top 15 lenders, it’s clear Chase was biased toward processing loans for larger clients. 

Why would they do that when they knew how desperate things were for small business owners? Well, let’s just say they generated over $200,000,000 in processing fees for themselves—and that’s a conservative estimate.

By comparison, the bank with the lowest reported amount of funds processed was able to process 50 percent more loan applications (40,746) for a total of almost $3 billion in loans at an average loan size of $72,803. 

That bank generated only 10 percent of the fees that Chase did, while helping 13,439 more businesses to survive the devastating effects of the COVID-19 crisis.

I wish the SBA would identify this bank, so we would have the pleasure of giving them the credit they deserve.

4. They left you in the dark

So, what did Chase do with all the small business loan applications they received? Well, simply put, they kept them around for round two. No one knows where they stand in line except Chase, but let’s hope all the pressure on them today will get them to process. 

Of course, that also means they prevented their loyal small business clients from applying with smaller local and regional banks, that actually could have helped them access the funds they so desperately needed. 

Unbelievably brazen, these actions constitute yet another flagrant violation of trust. There have been so many, I’ve lost count.

How Will Their Decisions During This Crisis Impact the Future of JP Morgan Chase Bank?

I hope small business owners reflect on Jamie Dimon’s quote on the homepage of their shareholder update…. 

Throughout our history, JP Morgan Chase has built its reputation on being there for clients, customers and communities in the most critical times. This unprecedented environment is no different. Our actions during this global crisis are essential to keeping the global economy going and will be remembered for years to come.

I can only hope this holds true, small business owners hold them accountable for their actions, and all small business owners find new local or regional banks to work with in the years to come.  

Related content: Get SBA-Approved Tips on Receiving Federal Funding 

Special Side Note of Thanks

Last week after reading my post about the Good, the Bad and the Truly Ugly, Ryan (one of our members) sent me a note sharing the tireless hours he and his team had put in at another bank (one more like bank #15) where they were 100 percent dedicated to helping their small business customers.  

I wanted to add this special note of thanks for these first responder types who rose to the challenge, worked incredibly long hours, and got these critical resources to small business owners across the country when they needed them the most.  

You are small business heroes and we appreciate all you are doing!  #SmallBusinessStrong. 

Read next: 7 Small Business Owners Who Landed CARES Act Funds