This class action has been brought by an accounting firm that helped small businesses prepare applications for the Paycheck Protection Program (PPP). It alleges that a number of banks that participated in the program have refused to pay agents as the program requires. The banks named include Bank of America, NA, Desert Financial Credit Union, JPMorgan Chase Bank, NA, Notre Dame Federal Credit Union, and US Bank, NA.
The class for this action is all agents who helped a business prepare an application for a PPP loan pursuant to the CARES Act.
Small businesses have been hit hard in the shutdowns imposed to prevent the spread of Covid-19. To relieve the financial stress, the federal government instituted the PPP, which was part of the CARES Act. It was designed to get funds to small businesses quickly, so that they could keep paying their employees and not go out of business.
The PPP was administered by the Small Business Administration (SBA) and the Treasury. The funds were to be distributed through ordinary banks and other lenders.
The PPP regulations anticipated the need for agents to help small businesses prepare their applications. The complaint claims, “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[s].”
The lenders and agents were each to be paid a percentage of the amounts of the loans granted. For example, for loans of not more than $350,000, the lender would get 5% of the loan amount. The agent would get 1% of the loan amount. The complaint quotes the CARES Act as saying, “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.”
The complaint later adds, “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.”
Plaintiff Compu-Tax & Accounting, LLC is now seeking to get paid for its services as an agent helping to prepare PPP applications. However, according to the complaint, some lenders are now refusing to pay the agents that prepared applications.
The counts include conversion, unjust enrichment, and violations of state laws, the CARES Act, and SBA regulations. It asks for declaratory relief, saying that the lenders must pay the agents who helped prepare the applications they processed.
Article Type: LawsuitTopic: Government Programs or Benefits
Most Recent Case Event
Desert FCU, Notre Dame FCU, Others Refuse to Pay PPP Agents Class Action
August 5, 2020
This class action has been brought by an accounting firm that helped small businesses prepare applications for the Paycheck Protection Program (PPP). It alleges that a number of banks that participated in the program have refused to pay agents as the program requires. The banks named include Bank of America, NA, Desert Financial Credit Union, JPMorgan Chase Bank, NA, Notre Dame Federal Credit Union, and US Bank, NA.
Desert FCU, Notre Dame FCU, Others Refuse to Pay PPP Agents Class ActionCase Event History
Desert FCU, Notre Dame FCU, Others Refuse to Pay PPP Agents Class Action
August 5, 2020
This class action has been brought by an accounting firm that helped small businesses prepare applications for the Paycheck Protection Program (PPP). It alleges that a number of banks that participated in the program have refused to pay agents as the program requires. The banks named include Bank of America, NA, Desert Financial Credit Union, JPMorgan Chase Bank, NA, Notre Dame Federal Credit Union, and US Bank, NA.
Desert FCU, Notre Dame FCU, Others Refuse to Pay PPP Agents Class Action