Bank of America Refusal to Pay Agents for PPP Help Class Action

Can a bank benefit from a government program while refusing to obey its rules? The complaint for this class action alleges that Bank of America Corp. and Bank of America, NA are profiting from the Covid-19-related Paycheck Protection Program (PPP) while refusing to abide by its requirements. Specifically, the complaint alleges that Bank of America is refusing to pay the agents who helped small businesses prepare their applications.

The PPP was designed to provide quick assistance to small businesses so that they could keep paying employees for at least a portion of the time they were affected by the Covid-19-related income losses.

The PPP was administered by the Small Business Administration (SBA), while the loans were made through banks and other regular lenders. Because the loans were guaranteed by the government, lenders ran very little risk in participating in the program.

Because the money had to be gotten to the small businesses quickly, the complaint says, “Congress decided that the financial institutions would not be required to verify the accuracy of the applications.” Instead, the small businesses applying were responsible.

The applications would therefore require certain representations and certifications. Congress recognized that many small businesses would need the assistance of agents, such as accountants and attorneys, to prepare their applications.

As compensation, the PPP allocated fees for both the lenders and agents. For example, for loans of less than $350,000, fees of 5% of the loan amount were to be delivered to the lender. If the small business had gotten the help of an agent, the lender would keep 4% as an origination fee and pay the other 1% to the agent.

In fact, the PPP expressly forbid fees to be charged directly to the small business borrowers. PPP regulations state that agent fees “will be paid by the lender out of the fees the lender receives from SBA.”

Bank of America is a very large bank with, according to the complaint, over $2 trillion in assets. The complaint estimates that it has been paid approximately $1 billion in origination fees, from which it should be passing on a portion to agents. However, the complaint alleges that the bank, despite its agreements to participate in the program, has refused to pay agents.

The complaint alleges conversion, breach of contract, and violations of state laws, among other things.

The class for this action is all persons and businesses who served as agents for the preparation or submission of a PPP loan application to Bank of America, where the loan was funded under the PPP. California, North Carolina, and Pennsylvania Subclasses have also been defined, for agents in those states.

Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Bank of America Refusal to Pay Agents for PPP Help Complaint

July 13, 2020

Can a bank benefit from a government program while refusing to obey its rules? The complaint for this class action alleges that Bank of America Corp. and Bank of America, NA are profiting from the Covid-19-related Paycheck Protection Program (PPP) while refusing to abide by its requirements. Specifically, the complaint alleges that Bank of America is refusing to pay the agents who helped small businesses prepare their applications.

Bank of America Refusal to Pay Agents for PPP Help Complaint

Case Event History

Bank of America Refusal to Pay Agents for PPP Help Complaint

July 13, 2020

Can a bank benefit from a government program while refusing to obey its rules? The complaint for this class action alleges that Bank of America Corp. and Bank of America, NA are profiting from the Covid-19-related Paycheck Protection Program (PPP) while refusing to abide by its requirements. Specifically, the complaint alleges that Bank of America is refusing to pay the agents who helped small businesses prepare their applications.

Bank of America Refusal to Pay Agents for PPP Help Complaint
Tags: Covid-19 Related, Failure to Pay for Work or Services Rendered