Arkansas Banks Refusal to Pay PPP Agent Fees Class Action

This class action brings suit against a group of Arkansas banks, alleging that they have refused to pay agents who helped to prepare small businesses’ applications for the Paycheck Protection Program (PPP), even though the program provides for such payments to agents to be taken out of the fees paid to the banks that participated in the program.

The defendants in this case include Simmons Bank, Centennial Bank, BankOZK, ArvestBank, First State Bank, First Western Bank, First Security Bank, and unknown parties listed as “ABC Banks 1-100.”

The PPP was part of the CARES package passed to provide relief to small businesses because of losses incurred to the coronavirus pandemic and the closures that resulted. It was intended to provide forgivable loans to small businesses so that they would not have to lay off their employees.

The program is administered by the Small Business Administration (SBA), with the funds distributed through banks and other lenders. The lenders are paid fees for this, calculated as a percentage of the loan amounts. For example, for loans of less than $350,000, the originating bank will receive 5% of the loan amount.

Because the assistance provided by the PPP had to be distributed quickly, lenders were not required to verify the information in the applications they accepted. Instead, the burden of accuracy was put on the applicants, who were required to provide certifications and other documentation.

It was understood that small businesses were likely to need the help of agents such as accountants, attorneys, or other professionals to complete their applications. Because the small businesses were already in financial difficulty and the point of the program was to provide financial relief, the rules specified that such agents “may not collect fees from the borrower or be paid out of the PPP loan proceeds.”

Instead, the Treasury Department’s Information Sheet on the program says, “Agent fees will be paid out of Lender fees. The Lender will pay the agent.” For example, when a lender is paid 5% of a loan amount, it can keep 4% but must pay the agent for the application the other 1%.

The complaint for this class action alleges that the banks who are the defendants in this case have not paid the agents as required.

The Nationwide Class for this action is all individuals and entities who

  • Are agents as defined in 13 CFR 103.1,
  • Prepared or submitted loans applications that were later approved, on behalf of small businesses under the PPP, between March 25, 2020 and June 30, 2020,
  • Submitted a request for payment to the lenders for, or were not paid at all, the fees that were due to them under the CARES Act or the Interim Final Rule, and
  • Have been denied their agent fee by the defendants in this case.
Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Arkansas Banks Refusal to Pay PPP Agent Fees Complaint

July 14, 2020

This class action brings suit against a group of Arkansas banks, alleging that they have refused to pay agents who helped to prepare small businesses’ applications for the Paycheck Protection Program (PPP), even though the program provides for such payments to agents to be taken out of the fees paid to the banks that participated in the program.

Arkansas Banks Refusal to Pay PPP Agent Fees Complaint

Case Event History

Arkansas Banks Refusal to Pay PPP Agent Fees Complaint

July 14, 2020

This class action brings suit against a group of Arkansas banks, alleging that they have refused to pay agents who helped to prepare small businesses’ applications for the Paycheck Protection Program (PPP), even though the program provides for such payments to agents to be taken out of the fees paid to the banks that participated in the program.

Arkansas Banks Refusal to Pay PPP Agent Fees Complaint
Tags: Covid-19 Related, Failure to Pay for Work or Services Rendered, Your Bank