Regions Financial Corporation and Regions Bank have been named in a proposed class action in which an Alabama CPA firm alleges the entities have refused to pay agents who’ve assisted small businesses with preparing and filing Paycheck Protection Program (PPP) applications.
According to the suit, Regions Bank has unilaterally refused to pay agents for their services despite the Small Business Administration’s clear guidance that attorneys, accountants, consultants, brokers and others are entitled to be paid by lenders, and not by PPP loan borrowers.
The lawsuit explains that the Paycheck Protection Program set up through the Coronavirus Relief, Aid, and Economic Security (CARES) Act aims to provide relief to small businesses struggling to pay their employees during the COVID-19 crisis. Under the PPP, businesses can submit an application through a private lender such as the defendants for a forgivable loan backed by the federal Small Business Administration (SBA), the suit says.
PPP lenders, for their part, are entitled to receive from the SBA reimbursement that ranges from one to five percent, depending on the loan amount, in exchange for processing a PPP loan application, the lawsuit continues. According to the case, any agent who assists a borrower with preparing, processing, and submitting an application is also entitled to receive a fee that is to be paid from the funds granted to the lender by the SBA.
The lawsuit argues that SBA guidance clearly states that PPP agents—which include attorneys; accountants; consultants; employees of applicants who prepare the form on their employers’ behalf; anyone who assists lenders with originating, dispersing, servicing, liquidating, or litigating the SBA loans; loan brokers; and anyone else who represents an applicant in its business with the SBA—are to be paid out of a lender’s fees. The complaint claims, however, that neither the plaintiff nor other agents have been paid by Regions Bank for their services.
According to the suit, the defendants informed the plaintiff that “Regions is not paying agent fees for PPP loans” and asked the CPA firm if its clients would still like to proceed with submitting their applications. Despite disagreeing with the defendants’ position, the plaintiff filed the applications anyway “in light of the urgency of getting the applications processed on behalf of clients,” the suit says. The plaintiff claims it has still not been paid for its services and suspects that Regions’ behavior is a “uniform and calculated effort” that has likely affected thousands of other PPP agents.
“The actions and inactions of the Defendants has occurred as a pattern and practice and is on-going even now,” the suit says, adding that PPP agents will suffer “irreparable harm” absent an order from the court directing the bank to cease its unlawful behavior.
“All qualified agents in the United States of America who timely assisted with, participated in and/or completed the submission of applications on behalf of clients for PPP loans via the CARES Act to the Defendants and Defendants refused to accept said applications on account of the agency relationship and/or failed to compensate the agents at any time.”
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