[ypzhang2]

These two articles are somewhat related and illuminating:

https://www.bloomberg.com/opinion/articles/2020-04-20/there-...

https://www.bloomberg.com/news/articles/2020-04-17/giant-u-s...

Long story short, part of the issue is that big banks have large complex regulatory and compliance schemes as a result of 2008. They are then unable to process SBA apps because of the low amount of government guidance, so smaller banks with smaller compliance teams were able to process more. This would also mean that smaller businesses would probably have a hard time getting all of their paperwork right vs bigger companies with dedicated legal and accounting teams. Also, banks will then prioritize existing customers, especially ones with loans, because most of the KYC and due diligence has been done already.

Part of the answer is that as an unintended consequence of previous compliance corrections, larger banks are just more unwilling to make loans under unclear guide lines, which obviously there will be if the government rolls out a program in a 1-2 weeks.