Union Bank is on the receiving end of a proposed class action in which a CPA firm claims the institution has failed to pay agents who provided services to Paycheck Protection Program applicants.
Amid the COVID-19 crisis, small businesses could seek financial relief through the CARES Act’s Paycheck Protection Program (PPP), the case begins. Through the PPP, businesses could apply for federally backed, forgivable loans through private lenders who would receive as compensation origination fees from the Small Business Administration (SBA).
According to the suit, PPP regulations specified that any agent—attorneys, accountants, consultants, loan brokers, and any representative of an applicant in its dealings with the SBA—who assisted a borrower with preparing or filing a PPP application would receive as payment for their services a percentage of a lender’s origination fees. Depending on the size of the loan, agents could receive up to one percent of the total loan amount, per the complaint.
The lawsuit alleges, however, that defendants MUFG Americas Holding Co. and MUFG Union Bank, N.A. have refused to pay PPP agents in a “deliberate scheme” to increase profits. According to the suit, the defendants intentionally failed to ask any questions or set up any process for borrowers to designate an agent who was to receive payment from the bank.
“It appears that this scheme was to claim ignorance of the existence of the agent as an excuse not to pay the agent its share of the compensation,” the lawsuit states.
The plaintiff, a California CPA firm, says it assisted at least one client in preparing and filing a PPP application with Union Bank and has not been paid for its services. The firm alleges the defendants have similarly refused to pay other PPP agents who provided assistance to the bank’s clients.
“Instead, Defendants retained all of the Agent Fees for themselves,” the case claims.
The lawsuit, echoing claims filed against otherfinancialinstitutions over PPP agent fees, looks to represent anyone who acted as an agent and provided assistance with the preparation and filing of a client’s PPP application to Union Bank that resulted in a loan being funded under the program.
ClassAction.org’s coverage of COVID-19 litigation can be found here and over on our Newswire.