Banks’ Refusal to Pay PPP Agent Fees Class Action

Many accountants, attorneys, and other such agents helped small businesses complete their applications for the Paycheck Protection Program (PPP). They were part of the push to get the funds to businesses fast, so that the businesses could keep keep paying their employees despite pandemic closures. Now many such agents are finding out that the banks that accepted the applications and processed the loans are withholding their pay.

The class for this action is all agents who assisted a business in preparing an application for a PPP loan, pursuant to the CARES Act.

What banks are doing this? The complaint names Century Bank, Century Bank and Trust Company, Colony Bank, Colony Bankcorp, Inc., Farmers & Merchants Bank of South Carolina, First Chatham Bank, Optus Bank, South Atlantic Bank, Synovus Bank, Truist Financial Corp., Truist Bank, United Community Bank, Inc., and United Community Bank (Georgia).

The PPP was part of the CARES (Coronavirus Aid, Relief, and Economic Security) Act. The CARES Act aimed to relieve some of the financial pressure on the country that resulted from business losses due to Convid-19. The PPP provided funds for forgivable loans to small businesses so that they could continue to have cashflow for a period of eight weeks.

The program is administered by the Small Business Administration (SBA) and the Treasury, with the funds distributed through banks and other lenders.

The banks did not have to verify the information on the applications. According to the complaint, “the SBA Regulations expressly contemplate and encourage PPP Agents to assist small businesses with their Applications. The SBA Regulations allow for and set standards by which PPP Agents are to be paid for their work. Specifically, the regulations require that PPP Agents be paid from a portion of the set fees provided to SBA Lender for processing the PPP Loan.”

The complaint alleges that lenders are “generously compensated for processing PPP loans” based on the amount of the loans. For loans of $350,000 or less, for example, they would be paid 5% of the loan amount. However, some of that fee was to go to the agent who had prepared the application.

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 the fees from the borrower or be paid out of the PPP loan proceeds.” For loans of $350,000 or less, for example, they are to be paid 1% of the loan amount. That 1% is supposed to come out of the lender’s 5% fee.

The plaintiff in this case is Williams & Haupt, PC, which acted as an agent for PPP applications that were submitted to the banks or affiliated institutions that are defendants in this case. The complaint alleges that Williams & Haupt has yet to be paid for the agent services it provided.

Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Banks’ Refusal to Pay PPP Agent Fees Complaint

July 20, 2020

Many accountants, attorneys, and other such agents helped small businesses complete their applications for the Paycheck Protection Program (PPP). They were part of the push to get the funds to businesses fast, so that the businesses could keep keep paying their employees despite pandemic closures. Now many such agents are finding out that the banks that accepted the applications and processed the loans are withholding their pay.

Banks’ Refusal to Pay PPP Agent Fees Complaint

Case Event History

Banks’ Refusal to Pay PPP Agent Fees Complaint

July 20, 2020

Many accountants, attorneys, and other such agents helped small businesses complete their applications for the Paycheck Protection Program (PPP). They were part of the push to get the funds to businesses fast, so that the businesses could keep keep paying their employees despite pandemic closures. Now many such agents are finding out that the banks that accepted the applications and processed the loans are withholding their pay.

Banks’ Refusal to Pay PPP Agent Fees Complaint
Tags: Covid-19 Related, Provisions of Government Programs