A proposed class action lawsuit alleges PNC Bank has exploited the coronavirus crisis at the expense of small businesses by failing to abide by the U.S. Small Business Administration’s (SBA) first-come, first-served mandate when handling applications for Paycheck Protection Program (PPP) loans.
The 23-page complaint alleges PNC Financial Services Group, Inc. and PNC Bank, National Association favored their own financial interests by prioritizing larger PPP loan applications for bigger companies and PNC’s own clients over those of smaller businesses, independent contractors and non-PNC customers. Echoing litigation filed against Wells Fargo and JPMorgan Chase, the complaint claims PNC is among the financial institutions who aimed to minimize risks to their bottom line by providing preferential treatment to wealthier, more valuable clients while leaving many mom-and-pops out to dry.
“Indeed, news reports have revealed that banks provided preferential ‘concierge’ treatment for their wealthiest clients, including a two-tiered system providing fast-track procedures for the bank’s most valuable customers that avoided cumbersome and buggy online portals which ordinary mom and pop businesses were required to use,” the suit reads.
According to the case, PNC received between one and five percent of each PPP loan amount in fees, depending on the size of the loan. Loans worth less than $350,000 brought in five percent in fees while loans sitting between $2 million and $10 million pulled in one percent in fees, the suit says. Given PNC has received more than 75,000 PPP loan applications alone as of April 15, the defendants have garnered “approximately $10 billion” in fees to date from PPP borrowers, the lawsuit claims.
By effectively moving larger clients to the front of the line for PPP loans, PNC was able to not only minimize its own exposure to default but ensure some of the federal money would be deposited into PNC accounts and thereby bolster its liquidity, the suit continues.
The plaintiff, a non-profit working at the intersection of technology and government, claims its prompt application for a more than $250,000 PPP loan should have been handled on a first-come, first-served basis. PNC, however, “delayed submitting the application,” and told the plaintiff that its application had not been timely submitted, according to the case. The complaint says that on April 18, PNC informed the plaintiff “without explanation” that it was unable to review and process the entity’s PPP loan application before the SBA announced it was no longer accepting new submissions.
“If Defendants had not misled and deceived their small business clients, such clients could have submitted their applications for loans through the PPP with other lenders that were following the required ‘first-come, first-served’ application processing order,” the plaintiff asserts.
After the first wave of PPP funds ran out last week, Congress released another $484 billion in relief money aimed at helping small businesses and hospitals and increasing the nation’s coronavirus testing capacity.
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