JPMorgan, Wells Fargo, Bank of America, US Bank were chasing higher fees on PPP loans, the lawsuit said
- Sue small business owners JPMorgan Chase, Wells Fargo, Bank of America and US bank, claims that the banks in the Paycheck Protection Program (PPP) have prioritized larger loans – because of the fees involved – instead of processing applications on a first-come-first-served basis.
Plaintiffs cited SBA data suggesting lenders processed twice as much $ 150,000 and fewer loans in the past three days than they did in the first 11 days.
The structure of the program allows banks to earn 5% lending fees on loans up to $ 350,000; 3% on loans of $ 350,000 to $ 2 million; and 1% on loans between $ 2 million and $ 10 million, according to Bloomberg. That adds up to $ 17,500 for processing a $ 350,000 loan, compared to $ 100,000 for a $ 10 million loan.
Each of the four banks “hid from the public that they were shuffling the PPP requests it received and prioritizing the ones that would bring the bank the most money,” claim plaintiffs in the Central District class action lawsuits filed in the US District Court on Sunday from California.
“I should have [the bank] “To be honest, small businesses would have (and could have) submitted their PPP applications to other financial institutions that processed applications on a first-come-first-served basis,” the lawsuits said.
Characterizing the application process as first come, first served – and then bypassing it to favor larger loans – would violate California’s unfair competition law, the lawsuits said.
“If applications were processed on a first-come-first-served basis as required, the percentage change in applications submitted in the last three days of the program would be the same for all application types,” the plaintiffs said in the lawsuit.
The SBA data they cite can make a tricky paper trail. It is not clear how many loans each bank has issued on certain days and in what amount. It also does not specifically identify lenders. However, an SBA report shows that the largest lender, “Lender 1”, has distributed more than $ 14 billion in PPP funds. JPMorgan Chase later has identified than this lender.
The country’s largest bank declined to comment on the case, but said in a Post frequently answered questions on his website that his smallest business customers received more than twice as many loans – around 18,000 – as larger customers in the business customer area. “We have different lines of business that serve different types of customers,” said the bank. “Each company worked separately on credit for its customers. … Our intention was to serve as many customers as possible and not to prioritize customers over others.”
A Bank of America spokesman Bill Halldin said: The New York Times“We deny the allegations.”
The US Bank also dismissed the lawsuit’s claims. “We plan to vigorously defend ourselves as it is without merit,” the bank said in a statement. according to Politico. “The industry cumulative data provided by the SBA does not reflect the practices or results of the US bank. We continue to serve our small business customers and are ready to process loans as quickly as possible should additional funds become available. “
Wells Fargo declined to comment, but said it was “working as soon as possible to support small businesses with the paycheck protection program.”
The San Francisco-based lender has actually – as recommended by the plaintiffs – encouraged borrowers to seek advice from another bank.
“While you remain in the queue, depending on when you submitted your original interest, we are currently unable to start your application due to high demand,” the bank said in an email dated Jan. San Francisco Business Journal. “Since the SBA only approves a limited amount of funds for the Paycheck Protection Program, we want you to be aware of your options.
“You may want to apply elsewhere to increase your chances of getting a loan before the funds are used up,” the email continued.
Each lawsuit asserts financial damage in excess of $ 5 million Bloomberg law.
The California lawsuits are not the first against banks in connection with the PPP rollout. A group of small business owners in Maryland sued Bank of America on the first day of the program to ensure that it only accepts applications from existing customers. Such a measure would reduce the amount of time the bank would spend verifying the identity of the loan seeker and thus reduce processing times.