ICBA: Congressional Report Validates That Community Banks Are a Superior Alternative to Nonbank Lenders

Washington, D.C. (Dec. 2, 2022) — Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued the following statement on the Select Subcommittee on the Coronavirus Crisis’s report regarding the role of financial technology companies in facilitating a disproportionately high rate of fraudulent and otherwise ineligible loans through the Paycheck Protection Program.

“The Select Subcommittee on the Coronavirus Crisis’s report validates what ICBA has long said: community banks were the unequivocal leaders of the U.S. economic recovery during the pandemic due to their outsized role as providers of Paycheck Protection Program small-business loans. Their relationship-based banking model and deep understanding of their customers and communities made them a superior alternative to nonbank lenders. Community banks’ traditional approach to lending, due diligence, and fraud mitigation controls provided them with a framework to identify and eliminate many lending risks that fintechs were not prepared to address.

“The fintech model works best and provides the least risk when operating within the regulated space by partnering with community banks, known for their commitment to building trust and maintaining an appropriate risk management structure. According to the report, the fintechs that worked closely with community banks, responding to their requests for more formalized and in-depth fraud management, were able to increase due diligence on loans, mitigate fraudulent applications and benefitted from their relationships.

“Community banks were the predominant PPP lenders during one of the most tumultuous and concerning times in recent history—serving 55.8 percent of all PPP recipients and accounting for nearly 60 percent of the program’s total loan amount. Community banks did so while also leading in lending to minority-owned, women-owned, and veteran-owned businesses; supporting demographically and socioeconomically underserved communities; making loans in rural, suburban, and urban America; and saving an estimated 49 million local jobs in critical areas of the economy.

“Community banks look forward to continuing to support local customers and communities and being a trusted lifeline during times of economic uncertainty.”

For more information, visit icba.org.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5.8 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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