July 9, 2020 – Bank of America Facing More PPP Agent Lawsuits
Bank of America is a defendant in at least two more proposed class action lawsuits filed by accounting firms who allege they were stiffed by the bank on Paycheck Protection Program (PPP) application preparation fees.
One case, filed June 24 by a California bookkeeper, claims that while lenders such as BoA were compensated by the government with generous origination fees for their participation in the PPP, the institution, one of the largest banks in the country, fell out of CARES Act compliance by failing to pay those who assisted small businesses in applying for the forgivable loans.
“Under the PPP rules, Defendant received an origination fee of $3,512.15, and Plaintiff was entitled to an Agent Fee of $702.43 to be paid from [BoA’s] origination fee,” the lawsuit says. “Yet despite clear direction from the [Small Business Administration] that agent fees ‘will be paid by the lender out of the fees the lender receives from the SBA,’ and despite certifying under penalty of perjury that it was in compliance and would remain in compliance with PPP regulations, Defendant has not remitted any fees to Plaintiff.”
Another lawsuit, filed July 6 in Massachusetts, claims Bank of America, as well as North Shore Bank and TD Bank, “profited handsomely” from their involvement in the PPP yet failed to pay the plaintiff, an accountant, who helped secure more than $1.1 million in loans for small businesses.
“Not one of the Defendants implemented any process for identifying the Agents who assisted borrowers in obtaining PPP loans—likely hoping that the absence of such records would relieve them of the obligation to pay Agents their mandatory fees,” the complaint alleges.
A proposed class action filed by a Utah accounting firm claims a stable of banks and credit unions has failed to pay agents who assisted with the preparation and filing of Paycheck Protection Program (PPP) applications.
The 22-page lawsuit alleges defendants Bank of America Corporation; Bank of America, N.A.; Chase Bank USA, N.A.; Mountain America Federal Credit Union; and University First Federal Credit Union have overstepped Small Business Administration (SBA) mandates by refusing to pay or not paying full statutory fees to accountants, consultants, loan brokers, or other representatives who helped clients file PPP loan applications.
According to the case, the PPP was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a means for small businesses to receive federally backed, forgivable loans to assist with battling economic hardship caused by the COVID-19 crisis. Though backed by the SBA, the PPP was to be administered through private lenders such as the defendants, who, in return for administering a PPP loan, would receive between one- and five-percent fees depending on the size of the loan, the case explains.
The suit says that under SBA regulations, any PPP agent—including an attorney, accountant, consultant, employee of the borrower who prepares their employer’s application, anyone who assists a lender in relation to an SBA loan, loan broker, or any other individual who represents an applicant in its business with the SBA—was to be paid for their services by the PPP lender through a portion of the funds it received from the SBA. According to the case, agent fees ranged between 0.25 and one percent of the loan amount, depending on the size of the loan.
The lawsuit claims that despite SBA regulations, the defendants have either refused to pay PPP agents as a matter of policy or have agreed to pay only a percentage of the fees owed, “thus retaining for themselves all of the statutory fees allotted by the Government for Agents as part of the PPP.” The plaintiff firm claims although it has assisted clients with gathering required documents and preparing their PPP applications, it has not been paid the statutory agent fees by the defendant lenders as required under the program.