Each bank “concealed from the public that it was reshuffling the PPP requests it received and prioritizing the requests that would make it the most money,” each of the four lawsuits said.
The lawsuit was brought by a series of small California businesses, including a frozen yogurt store, law firms, an auto repair company and a cybersecurity company.
Each bank “has prioritized corporate greed over its small business clients,” according to the lawsuits, which seek class action status.
Bank of America and US Bank have denied these allegations. JPMorgan Chase and Wells Fargo declined to comment on the lawsuits.
Applications loaded at the front?
Demand was so high for PPP loans, which charge only 1% interest, that the program ran out of money. earlier this month, leaving tens of thousands of small businesses without the lifelines they need to weather the crisis.
The US Senate on Tuesday approved $ 480 billion in coronavirus relief, including an additional $ 310 billion in PPP funds. Loans are only repayable if small businesses maintain current levels of employees and compensation.
Banks were supposed to process PPP requests on a first come, first served basis.
However, the lawsuit cited data from the US Small Business Administration that the plaintiffs said showed banks were prioritizing and preparing claims with higher loan amounts. Larger loans mean higher fees for banks.
The lawsuits, however, did not produce any emails or internal documents suggesting that this was the banks’ intention.
JPMorgan: 40,000 other verified applications ready to launch
In a statement, Bank of America said that “while we do not agree with these allegations, we are completely focused on processing the claims so that they are ready for submission” to the SBA once it will resume accepting requests.
JPMorgan said 80% of Chase Business Banking’s PPP loans go to companies with revenues of less than $ 5 million. And over 60% of these PPP loans went to clients with less than 25 employees. JPMorgan said it has more than 40,000 processed and fully verified claims ready for submission to the SBA, which would provide an additional $ 7.3 billion to small business clients.