Comerica Bank has unlawfully refused to pay agents who assisted small businesses with applying for Paycheck Protection Program (PPP) loans, according to a proposed class action.
Filed against Comerica, Inc.; Comerica Bank; and Comerica Bank & Trust, N.A., the 30-page lawsuit out of Texas explains the PPP was implemented as part of the CARES Act to provide swift financial assistance to struggling businesses amid the COVID-19 crisis. Under the program, small businesses could apply for federally backed, forgivable loans through private lenders, such as the defendants, the case says.
Private lenders who processed the loans were to be compensated directly by the Small Business Administration (SBA) in the form of a “generous origination fee” that amounted to between one and five percent of the loan amount, depending on the size of the loan, the suit continues. In turn, lenders were required to pay applicants’ agents—i.e. attorneys, accountants, consultations, loan brokers, or any other representative who assisted a business in its dealings with the SBA—a portion of their SBA fees. According to the complaint, agents were to receive between 0.25 and one percent of the loan amount, depending on the size of the loan.
The lawsuit alleges that Comerica has refused to pay agents who assisted PPP borrowers with preparing or filing their applications despite clear guidance from the SBA to do so. According to the case, the defendant’s failure to pay loan agents is a deliberate, “company-wide policy” evidenced by the fact that Comerica set up its PPP application process “without even asking the borrower if they utilized the assistance of an agent.”
Comerica, the suit alleges, violated both PPP regulations and its own certification that it would comply with such in order to become an approved PPP lender.
“To the extent Defendants had to certify, at any point, that they would follow the PPP’s regulations in making PPP loans, they were not being truthful,” the complaint scathes. “Defendants’ policy to refuse to pay Agent Fees directly violates the PPP’s implementing regulations.”
The lawsuit estimates that Comerica has been allocated over $164 million in origination fees, a percentage of which is owed to PPP agents. Comerica’s refusal to pay agents in the midst of an “unprecedented economic/pandemic crisis” represents “short-sighted profit-padding at best, and blatantly illegal conduct, at worst,” according to the suit.
Far from the first lender to be hit with proposed class action litigation over PPP agent fees, Comerica joins the likes of Bank of America, Chase, Citibank, and others in facing lawsuits filed amid the COVID-19 crisis.
ClassAction.org’s coverage of COVID-19 litigation can be found here and over on our Newswire.