Bank of America, JPM Chase Refuse to Pay PPP Agent Fees Class Action

This is one of a number of class actions alleging that lenders that processed loans for the Paycheck Protection Program (PPP) are refusing to complete their obligations by paying the agents who helped prepare the applications. Among the defendants in this case are Bank of America, NA, First Home Bank, Frost Bank, JPMorgan Chase Bank, NA, Pacific Enterprise Bank, Readycap Lending, LLC, US Bank, NA, and Wells Fargo Bank, NA.

The class for this action is all agents who helped a business prepare an application for a PPP loan under the CARES Act. Alternatively, it proposes a California Class.

The PPP was intended to alleviate economic pressure on small businesses during the Covid-19 pandemic by providing forgivable loans to small businesses. The small businesses were to use them to cover certain expenses, such as employee paychecks, during a period of eight weeks, so that they would not have to lay people off or permanently shut down.

The PPP was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP was to be administered by the Small Business Administration (SBA) and the Treasury, with the loans made through banks and other ordinary lenders.

The complaint alleges that the SBA’s regulations for the program “expressly contemplate and encourage PPP agents to assist small businesses with their Applications…. Specifically, the regulations require that PPP Agents be paid from a portion of the set fees provided to SBA Lenders for processing the PPP Loan.”

According to the complaint, lenders are “generously compensated” for facilitating the PPP loans. For example, for loans of up to $350,000, the SBA gives lenders 5% of the loan amount.

The CARES Act says, “Agent fees will be paid by the lender out of the fees the lender receives from SBA. Agents may not collect fees from the borrower or be paid out of the PPP loan proceeds.” As with the lender fees, the agent fees are based on a percentage of the loan amount. For example, for loans up to $350,000, the agents are to be paid 1% of the loan amount.” This 1% is to come out of the 5% given to the lender.

However, a number of lenders, having received their lender’s fees, are refusing to pass along the agents’ portions.

The complaint makes a clear point: “Nowhere in the CARES Act or the SBA Regulations does the Federal Government state, or even suggest, that Lender’s approval is required in order for an Applicant to use an Agent.”

Despite this, some banks have publicly stated that they are not paying agent fees.

Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Bank of America, JPM Chase Refuse to Pay PPP Agent Fees Complaint

July 22, 2020

This is one of a number of class actions alleging that lenders that processed loans for the Paycheck Protection Program (PPP) are refusing to complete their obligations by paying the agents who helped prepare the applications. Among the defendants in this case are Bank of America, NA, First Home Bank, Frost Bank, JPMorgan Chase Bank, NA, Pacific Enterprise Bank, Readycap Lending, LLC, US Bank, NA, and Wells Fargo Bank, NA.

Bank of America, JPM Chase Refuse to Pay PPP Agent Fees Complaint

Case Event History

Bank of America, JPM Chase Refuse to Pay PPP Agent Fees Complaint

July 22, 2020

This is one of a number of class actions alleging that lenders that processed loans for the Paycheck Protection Program (PPP) are refusing to complete their obligations by paying the agents who helped prepare the applications. Among the defendants in this case are Bank of America, NA, First Home Bank, Frost Bank, JPMorgan Chase Bank, NA, Pacific Enterprise Bank, Readycap Lending, LLC, US Bank, NA, and Wells Fargo Bank, NA.

Bank of America, JPM Chase Refuse to Pay PPP Agent Fees Complaint
Tags: Covid-19 Related, Failure to Pay for Work or Services Rendered, Provisions of Government Programs