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Congress’ repayable loan program, the centerpiece of their multi-trillion-dollar stimulus package, has been aimed to keep small businesses and their workers afloat during the pandemic.

Demand was so high for this program, which offered full loan forgiveness if employees keep their employees on payroll through the term, that the program ran out of money in early April, leaving thousands of small businesses without a lifeline.

Now, a variety of small businesses are opening a lawsuit against these larger banks, including Wells Fargo, JPMorgan, Bank of America, and US Bank, accusing them of front-loading applications that would make the bank the most money. Evidence they point to being that approvals for loans under $150,000 surged by 70% in the final three days of the rollout. Had it not been front-loaded, we would have seen an even distribution among applications over the two-week period.

I can speak to the inconvenience these big banks have caused, having dealt with one directly being a small business owner myself. After applying for the payroll continuation program, I heard nothing for over a week. We were handed off to a third party that was helping to run things, where they had me fill out and resubmit all of the needed paperwork. After this was done, another long two weeks went by. On top of this inconvenience itself, the third-party became as inaccessible as the banks themselves. Emails went unanswered, phone numbers were non-existent, and I even resorted to trying to reach and shame them on Twitter to no avail. By the time they said they even had the paperwork, the first window for receiving the loan had passed.

On top of my own personal anecdote, many businesses have found difficulty in securing the money they need to continue operations. It opens the door for smaller banks to seize this opportunity and emphasize the attributes that have kept them around.

Attributes of small banks:

  • Urgency – The ability to act fast in a changing environment is vital now more than ever.


  • Relationship/Intimacy – You know your clients and their needs. You place an emphasis on community and community values.


  • Front-line Information – If you are able to keep your employees well informed, they can be your front-line defense and will even be incentivized to speak on behalf of the company.

This landscape has also allowed new-wave organizations to enter the conversation on a broader scale. Ally, a digital-only bank, has been forgiving overdraft fees for individuals so that they are able to receive their full stimulus package from the federal government. This sort of creativity brings an already familiar company into the spotlight at a time where people are looking for what a new normal could be in every industry.

These big banks, especially Wells Fargo, were already digging themselves out of a deep reputation hole. This whole situation offered them an opportunity to rebuild their rapport, and instead they have reinforced all of the negative stereotypes that created the hole in the first place. They have most likely ensured themselves another visit to Congress in the process.

It is evident that the Wells Fargo and the other large banks have a long road ahead of them in regaining the trust of not only individuals, but organizations of all sizes looking for assistance. Smaller and more digitally focused competitors are gaining “great will,” and many are noticing. People aren’t quick to forget in times like this, and the ripple effect of company’s actions will be seen for years to come. Whether or not they are too big to fail, they may be reaching a point of being so large that they fail their customers in an irreparable way.