BMO Harris Bank No Pay for Agents Who Helped with PPP Loans Class Action

Because the Paycheck Protection Program (PPP) was intended to help small businesses under strain in the time of Covid-19, it contains a provision for help in preparing the applications: It requires the lenders give a portion of their origination fee to the agents that helped with the preparation. The complaint for this class action alleges that BMO Harris Bank, NA and BMO Financial Corp. refuse to do this.

The class for this action is all persons or businesses who acted as an agent providing assistance to a client in the preparation of submission of a PPP loan application to BMO Harris Bank which resulted in a loan funded under the PPP. An Illinois Subclass has also been defined.

The complaint says that “in order to avoid delay, Congress decided that financial institutions would not be required to verify the accuracy of the applications.” Instead, the small businesses themselves would have that responsibility.

This means, the complaint says, “there would need to be a number of representations and certifications[.]” To ensure “timely, truthful and accurate applications, Congress understood that small businesses would need assistance from the nation’s professional accountants, tax preparers, financial advisors, attorney, and other such agents…”

Where would they get the money to engage such people quickly in a time of financial strain? The money was to be a percentage of the loan amount, paid out of the bank’s origination fee for processing the loan.

For example, for loans of less than $360,000, the bank would receive 5% of the loan amount; the bank was then to pay the agent who helped with the application 1%. The complaint says that the bank’s 5% fee “was allocated as 80% to the lender and 20% to the CPA or attorney assisting the small business borrower.”

The complaint claims that BMO has earned $176 million in these origination fees. Still, it alleges, the bank refuses to pass on the amounts earned by those who helped the small businesses prepare their applications. Not only that: The complaint claims that the bank has asserted that it “will not accept application that are prepared by or with assistance of agents”—thus refusing small business the help the law has provided for.

The failure to pay agents, the complaint says, “is in blatant violation of PPP regulations stating that the agent fees ‘will be paid by the lender out of the fees the lender receives from the SBA.’”

The plaintiff in this case is Prinzo & Associates, a CPA firm ostensibly owed money for the preparation of such loan applications.

Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

BMO Harris Bank No Pay for Agents Who Helped with PPP Loans Complaint

June 2, 2020

Because the Paycheck Protection Program (PPP) was intended to help small businesses under strain in the time of Covid-19, it contains a provision for help in preparing the applications: It requires the lenders give a portion of their origination fee to the agents that helped with the preparation. The complaint for this class action alleges that BMO Harris Bank, NA and BMO Financial Corp. refuse to do this.

BMO Harris Bank No Pay for Agents Who Helped with PPP Loans Complaint

Case Event History

BMO Harris Bank No Pay for Agents Who Helped with PPP Loans Complaint

June 2, 2020

Because the Paycheck Protection Program (PPP) was intended to help small businesses under strain in the time of Covid-19, it contains a provision for help in preparing the applications: It requires the lenders give a portion of their origination fee to the agents that helped with the preparation. The complaint for this class action alleges that BMO Harris Bank, NA and BMO Financial Corp. refuse to do this.

BMO Harris Bank No Pay for Agents Who Helped with PPP Loans Complaint
Tags: Covid-19 Related, Failure to Pay for Work or Services Rendered, Your Bank