Citigroup to buy PPP loans from minority-owned banks
Citigroup plans to buy up to $50 million in Paycheck Protection Program loans from minority-owned depository institutions.
The $2.2 trillion-asset Citigroup developed the loan-purchase program in partnership with the National Bankers Association, a trade group representing 22 minority banks. The program aims to boost capital levels at participating minority institutions.
Citigroup said in a press release Wednesday that the originating banks will service the loans and can retain the fee income paid by the Small Business Administration.
“By moving these loans off our balance sheet, we are able to redeploy capital into further assisting our customers and supporting our local economy,” Laurie Vignaud, CEO of the $106 million-asset Unity National Bank in Houston, said in the release.
Unity also partners with Citigroup as part of the Treasury Department’s Financial Agent Mentor-Protégé program, which pairs large banks that process financial transactions for the government with minority depository institutions.
Citigroup, which has originated more than $3.3 billion in PPP loans on its own, is donating the fee income it earns to its Citi Foundation.
“Our country needs banks of all sizes to serve businesses of all sizes and from all communities,” CEO Michael Corbat said in the release. “Citi actively partners with minority-owned banks to support their vital efforts to serve their diverse client base, and we applaud the work they did to ensure that the benefits of the PPP program reached minority-owned businesses.”
Minority depository institutions have made nearly 95,000 PPP loans, totaling for $9.7 billion, according to the SBA. Overall, the program has approved more than 4.3 million loans for $513.2 billion.
The SBA and the Treasury are jointly administering the program, which was launched April 3 to support small businesses impacted by the coronavirus pandemic. The SBA will pay PPP lenders an origination fee for each loan they make based on its dollar size.