America’s biggest banks gave preferential treatment to their wealthiest clients as they processed the federal government’s $349bn aid package, officially intended to be allocated on a first-come, first-served basis.

Applications from many small business owners were overlooked by banks intent on serving long-term, wealthy clients first, according to some bank employees and financial industry executives.

The staff members, who spoke on condition of anonymity to protect their jobs, point fingers at some of the nation’s biggest banks, including JPMorgan Chase, Citibank and US Bank.

The Paycheck Protection Program is a loan program that originated from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This is the $349bn package intended to provide American small businesses with eight weeks of cash-flow assistance through 100% federally guaranteed loans.

VIP treatment for “the best clients”

Customers of Citi’s private bank, where the minimum account size is $25m, didn’t have to use an online portal to apply for a loan. They could simply submit paperwork to their banker, who would put in an application on their behalf.

At Chase, the nation’s largest bank, nearly all private and commercial banking clients who applied for a small-business loan got one. But only one out of every 15 retail banking customers who sought loans was successful.

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Some banks provided highly personalised, so-called concierge service to their richest clients by enlisting representatives to walk them through every step and submit their paperwork.

The two-tiered system paid off for well-to-do customers: By the time the Paycheck Protection Program ran out of money last week, many top clients of national and regional banks had already had their loans approved.

Many small businesses left empty-handed

Banks typically categorise individuals and small businesses as retail customers, while bigger clients such as professional firms are handled through the commercial operation, where they get more personal attention. Private banks serve extremely wealthy individuals.

It’s the small business owners that were left empty-handed, and many had struggled from the start.

At Chase, a portal accepting preliminary requests to apply was only sporadically accessible on 3 April, the first day of the program. The best that customers could hope for was a call back from a Chase representative — days later — to proceed with the next steps.

A full week after the program’s introduction, Citi’s website was offering retail customers only a chance to submit their names and contact information to express their desire to apply for the program.

The bank then reached out to some, but not all, of those customers to invite them to submit full applications. Thousands of people never got to apply.

Citi’s private banking clients didn’t have to apply online via the portal, according to a person with knowledge of Citi’s operations.

Angry small business owners are suing

Customers of Bank of America, JPMorgan Chase and Wells Fargo have sued the banks in federal court, saying data provided by the Small Business Administration on the average size of the loans shows they doled out money to larger customers first.

The lawsuits – two against Chase and one each against Bank of America and Wells Fargo, all filed in the Central District of California – say smaller customers were not given the chance to apply as quickly as larger ones in some cases.

In other instances, the lawsuits say, the banks sat on some smaller customers’ applications instead of immediately submitting them to the SBA.

More money is needed

The programme ran out of money last week, leaving many small-business owners wondering how they would survive. The House of Representatives is poised to pass an additional $484bn aid package today.

This new rescue package is widely regarded as an interim step as the coronavirus pandemic continues to cause death and economic havoc. Lawmakers and the Trump administration are already turning their focus on the next round of stimulus for the stalled U.S. economy.

“We’re ready to go on to the next bill,” House Speaker Nancy Pelosi said this week.