By Brian Rinker – Staff Reporter, San Francisco Business Times
Wells Fargo & Co. (NYSE: WFC) unveiled the details of how it plans on donating the $400 million it generated in fees from processing Paycheck Protection Program loans, a promise the CEO had made back in April, during the early days of the U.S. Small Business Administration relief program when the bank had made a series of fumbles that led to widespread criticism.
Jenny Flores, head of small business philanthropy at Wells Fargo, told the San Francisco Business Times the donation is part of an ongoing commitment to supporting small businesses and is not necessarily linked to the ongoing troubles the bank has faced in recent years.
The PPP donation program has been dubbed the "Open for Business Fund," and the aim of it is to help small businesses, especially Black- and minority-owned businesses, impacted by Covid-19 to "stay open and get back to growth," according to Wells Fargo.
The $400 million will be split unevenly into three pots. First, $250 million will be given to nonprofit community lenders known as Community Development Financial Institutions, or CDFIs, to help support cash flow for small businesses that were hit hard by Covid-19.
The remainder will be divided out sometime after Labor Day and will focus on technical assistance, primarily to help owners pivot their business model, if needed, to make a profit. The assistance will provide education and mentorship. Lastly, the money will be made available at a later point for "recovery and resiliency" to support the long-term recovery of the business.
The CDFIs can apply for the funding starting Thursday, with the application window lasting until Aug. 7. The main caveat is they need to have a 2-year track record lending to diverse communities, Flores said.
"We also want to see what their outreach strategies are and how they connect these businesses in order for us to feel comfortable providing the funds," she said.
The first cycle of grants will total $28 million. The CDFIs that get the grants will then distribute them how they see fit – grants, payment relief, deferring loan payments – to support Black entrepreneurs and other diverse local businesses. The rest of the donations will roll out over the rest of the year.
Flores said the hope is for CDFIs to be located in areas where Wells Fargo has a presence – but that no one will be excluded. The company keeps its headquarters in San Francisco; Charlotte is home to its largest employment center. And it is the largest bank in the Triangle by share of deposits.
Besides Wells Fargo's bumpy ride during the PPP, it has faced much more serious problems, agreeing to pay $3 billion in February to settle criminal and civil investigations over banking employees using fraudulent tactics meet sales goals. The company has been trying to restore its reputation, but it has been dogged much of the way by scandals and missteps.
Wells Fargo CEO Charlie Scharf was brought in to rebuild the bank, and it was his idea to donate the PPP processing fees.
The bank made PPP loans to some 179,000 customers, totaling more than $10 billion.
When Scharf first made the promise to donate the fees, Flores said he did it "very early on in the PPP process without knowing how much it was going to be, and it turned out be $400 million.