Banks Refuse to Pay Agent Fees for PPP Applications Class Action

Congress passed the Paycheck Protection Program (PPP) to provide emergency loans to small businesses so that they could keep paying their workers during the shutdowns of the Covid-19 pandemic. The complaint for this class action brings suit against some of the lenders who accepted PPP applications, alleging they did not follow the provisions of the law to pay agents who helped small businesses fill out the applications.

The PPP was created to provide a loan for eight weeks of assistance, with a portion of the loan forgivable if it was used to keep paying employees.

The PPP Information Sheet (Lenders) identified three participants in the program: (1) lenders, who processed the applications and provided the loans; (2) small businesses, who applied for and used the loans; and (3) agents, such as accountants or business consultants, who assisted the small business in preparing the applications, since small businesses often do not have dedicated staff for such purposes.

Since PPP loans were to be provided on a first come, first served basis, small businesses needed to get their applications in as soon as possible. Agents therefore were crucial to many for facilitating the process. The complaint notes, “In fact, the original tranche of PPP funding was exhausted in about two (2) weeks after the program opened.”

Under the PPP, lenders and agents receive certain fees for their parts in the process.

Lenders receive a percentage of the loan amount (for example, 5% for loans of less than $350,00). They also may earn interest on loans that are not forgiven.

Agents also receive a percentage of the loan amount (for example, 1% for loans of less than $350,000). The regulations of the Small Business Administration (SBA), which administers the loans, specifies, “Agent fees will be paid out of the lender fees. The lender will pay the agent. Agents may not collect any fees from the applicant.”

The PPP does not permit the lender to negotiate or pre-approve the agent’s fees.

Unfortunately, the complaint alleges that certain of the lenders “have either failed to pay, or are willing to pay only a partial percentage of, the monies owed in Agent Fees…” and instead are “retaining for themselves all of the statutory fees allotted by the Government for Agents as part of the PPP….”

The class for this action is all agents (as the term is defined by SBA regulations) that helped businesses to receive a loan under the PPP (that is, who met the criteria for eligibility and were not otherwise ineligible), between February 15, 2020 and June 30, 2020, who timely applied for a PPP loan through various lenders and were processed and approved for the loan, and for whom lenders received their lenders’ fees.

Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Banks Refuse to Pay Agent Fees for PPP Applications Complaint

June 5, 2020

Congress passed the Paycheck Protection Program (PPP) to provide emergency loans to small businesses so that they could keep paying their workers during the shutdowns of the Covid-19 pandemic. The complaint for this class action brings suit against some of the lenders who accepted PPP applications, alleging they did not follow the provisions of the law to pay agents who helped small businesses fill out the applications.

Banks Refuse to Pay Agent Fees for PPP Applications Complaint

Case Event History

Banks Refuse to Pay Agent Fees for PPP Applications Complaint

June 5, 2020

Congress passed the Paycheck Protection Program (PPP) to provide emergency loans to small businesses so that they could keep paying their workers during the shutdowns of the Covid-19 pandemic. The complaint for this class action brings suit against some of the lenders who accepted PPP applications, alleging they did not follow the provisions of the law to pay agents who helped small businesses fill out the applications.

Banks Refuse to Pay Agent Fees for PPP Applications Complaint
Tags: Covid-19 Related, Failure to Pay for Work or Services Rendered