PNC Financial Services Group, Inc. has refused to pay agents who assisted small businesses with preparing and filing Paycheck Protection Program (PPP) applications, according to a proposed class action lawsuit.
Signed into law by Congress as a measure to stem some of the financial fallout from the COVID-19 crisis, the PPP afforded small businesses the opportunity to apply for forgivable loans backed by the Small Business Administration through private lenders such as the defendant, the lawsuit begins. In return for administering the loans, lenders were to receive from the SBA a percentage of the loans as an origination fee, per the complaint.
According to the case, the SBA specified that any agent—including attorneys, consultants, accountants, and loan brokers—who assisted an applicant in its dealings with the agency would be paid for their services from a portion of the lender’s origination fee. While lenders could receive between one and five percent of the loan, depending on the size of the loan, agents could receive between 0.25 and one percent, the suit says.
The lawsuit alleges that PNC, as a company-wide policy, has refused to pay agents who assisted PPP applicants. In fact, the bank states on the bottom of its webpage detailing PPP information that “PNC will not pay Agents for assistance they may provide an applicant in obtaining a PPP loan,” the complaint says.
PNC’s policy directly conflicts with guidance issued by the SBA regarding agent fees, the case argues, and has allowed the bank to retain the entirety of the “hundreds of millions of dollars” it received in PPP origination fees.
“Instead of distributing the funds the SBA provided PNC for the payment of agents, PNC has decided to keep all of the money for itself,” the complaint scathes.
The case goes on to allege that PNC deliberately failed to provide a place within its PPP application for a borrower to designate an agent in order to “claim ignorance” of the agent’s existence “as an excuse not to pay the agent its share of the statutorily mandated fee.”
The plaintiff, who runs a Chicago accounting firm, says he understood upon assisting clients with their PPP applications that he was entitled to roughly $3,245 in fees from PNC after the loans had been disbursed. Although his clients have received their loans, the plaintiff has yet to be paid by the defendant, the case says. The CARES Act initially authorized $349 billion in forgivable loans for small businesses, with another $310 billion added to the program once the first round of funds dried up.
“All persons and businesses in the United States who served as an agent in relation to, and provided assistance to a client in relation to, the preparation and/or submission of a client’s PPP loan application to PNC Financial Services Group, Inc. which resulted in a loan being funded under the PPP.”
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