American Express Nat’l Bank, Others Refuse to Pay PPP Agents’ Fees Class Action

The Paycheck Protection Program (PPP) is part of the CARES Act, designed to provide relief related to business closures during the Covid-19 pandemic. The PPP was intended to cover eight weeks’ worth of employee paychecks and certain other expenses to small businesses that might have otherwise had to lay off employees. The PPP provided for payments to agents who helped small businesses prepare the applications. However, the payments were to come though the banks that originated the loans, and many of them are now refusing to pass the payments along to the agents.

The Nationwide Class for this action is all agents who helped a business prepare an application for a PPP loan under the CARES Act.

To curb the spread of Covid-19, state governors have issued orders for non-essential businesses to close and consumers to stay at home. This has caused severe economic strain for both small businesses and their employees. The PPP was intended to relieve some of this strain on both sides by providing forgivable loans that would allow businesses to keep paying employees for a period of time.

The PPP was administered by the Small Business Administration (SBA) and the Treasury, with the loans distributed by banks and other lenders.

The complaint claims that the lenders were “generously compensated” for providing the loans. The amount they were to be paid depended on the amounts of the loans. For example, for a loan of $350,000 or less, the lender was to earn 5% of the amount of the loan.

The businesses that submitted the applications were expected to use the help of agents, such as attorneys and accountants, to prepare their applications. Agents were to be paid out of these lenders’ fees. For example, for a loan of $350,000 or less, they were to earn 1% of the amount of the loan, which was to be taken from the lender’s 5%.

The complaint quotes the CARES Act as saying, “Agent fees will be paid by the lender out of the fees the lender receives from the SBA. Agents may not collect fees from the borrower or be paid out of the PPP loan proceeds.”

Now, the lenders for the PPP have received their fees, but in many cases, they are not passing on to the agents the agents’ fees.

The lenders being sued for this in this case include American Express National Bank; Bank of America, NA, Bank of Marin, Bank of the West, Cambridge Savings Bank, Celtic Bank, Citibank, NA, Comerica Bank, First Bank, First Republic Bank, Grasshopper Bank, NA, Heritage Bank of Commerce, JPMorgan Chase Bank, NA, Kabbage, Inc., River City Bank, Silicon Valley Bank, The Mortgage Capital Development Corporation, U.S. Bank, NA, and Wells Fargo Bank, NA.

Article Type: Lawsuit
Topic: Government Programs or Benefits
Tags: Covid-19 Related, Failure to Pay for Work or Services Rendered, Provisions of Government Programs