Stearns Bank 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). Now many such agents are finding out that the banks that accepted the applications and processed the loans are withholding their pay. The complaint for this class action is brought by one such agent, Chestnut Street Consulting, LLC, alleging that Stearns Bank, NA is not paying it the agent fees it earned in preparing PPP applications.

The Nationwide Class for this action is all agents who helped a business prepare an application for a PPP loan under the CARES Act. Alternatively, a Connecticut Class has been defined.

The spread of Covid-19 required business shutdowns and stay-at-home orders in many parts of the US, causing business to lose their incomes. The PPP was part of the CARES (Coronavirus Aid, Relief, and Economic Security) Act, which aimed to relieve some of the resulting financial pressure on the country.

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.

Lenders accepted applications, but they 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 are 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.

Stearns has still not paid Chestnut Street Consulting the agent fees it earned in preparing PPP applications.

At least one PPP lender, United Community Banks, Inc. has received a civil investigative demand from the Department of Justice, asking it “to produce certain documents and respond to written interrogatories relating to the PPP loans approved by the Bank, the Bank’s non-payment of fees to agents of borrowers and the Bank’s policies related to payment or non-payment of agent fees.”

Article Type: Lawsuit
Topic: Government Programs or Benefits

Most Recent Case Event

Stearns Bank Refusal to Pay PPP Agent Fees Class Action

July 20, 2020

Many accountants, attorneys, and other such agents helped small businesses complete their applications for the Paycheck Protection Program (PPP). Now many such agents are finding out that the banks that accepted the applications and processed the loans are withholding their pay. The complaint for this class action is brought by one such agent, Chestnut Street Consulting, LLC, alleging that Stearns Bank, NA is not paying it the agent fees it earned in preparing PPP applications.

Stearns Bank Refusal to Pay PPP Agent Fees Class Action

Case Event History

Stearns Bank Refusal to Pay PPP Agent Fees Class Action

July 20, 2020

Many accountants, attorneys, and other such agents helped small businesses complete their applications for the Paycheck Protection Program (PPP). Now many such agents are finding out that the banks that accepted the applications and processed the loans are withholding their pay. The complaint for this class action is brought by one such agent, Chestnut Street Consulting, LLC, alleging that Stearns Bank, NA is not paying it the agent fees it earned in preparing PPP applications.

Stearns Bank Refusal to Pay PPP Agent Fees Class Action
Tags: Covid-19 Related, Failure to Pay for Work or Services Rendered, Provisions of Government Programs