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The PPP lawsuit affects four of America’s largest banks

Each bank “concealed from the public that it was reshuffling the PPP applications received and prioritizing the applications that would make the bank the most money,” said each of the four lawsuits.

The lawsuit has been filed by a number of small California businesses, including a frozen yogurt store, law firms, a car repair company, and a cyber security company.

Each bank “prioritized corporate greed at the expense of their small business customers,” the lawsuits seeking class action lawsuits.

The Bank of America and the US Bank denied the allegations. JPMorgan Chase and Wells Fargo declined to comment on the lawsuits.

Frontloaded applications?

The forgivable credit program, a key component of the $ 2 trillion stimulus package approved by Congress, is designed to keep small businesses and their employees afloat during the pandemic. The loans can be used by small businesses with 500 or fewer employees to pay wages, rent and utility bills.

The demand for PPP loans for which only 1

% interest was charged was so high that the program ran out of money Earlier this month, tens of thousands of small businesses were left without the lifeline they need to survive the crisis.

The U.S. Senate approved $ 480 billion of coronavirus aid, including additional $ 310 billion in PPP funding, on Tuesday. The loans can only be forgiven if the small companies maintain the current level of employees and remuneration.

Banks should process PPP requests based on availability.

However, the lawsuit cited data from the US Small Business Administration that the banks prioritized and preloaded applications with larger amounts of credit. Larger loans mean higher fees for banks.

However, the lawsuits did not result in emails or internal documents suggesting that this was the intention of the banks.

JPMorgan: 40,000 more verified applications are ready for use

In a statement, Bank of America said: “Although we disagree with these claims, we are fully focused on processing applications so that they can be submitted,” once the applications are accepted again.

US bank (USB) The lawsuit was “unfounded” and the SBA data cited “did not reflect” the “practices or results” of the bank.
Wells Fargo (WFC) Declined to comment on the lawsuit, but said it was working “as soon as possible to assist small business customers” with PPP “in accordance with US Treasury and SBA regulations and guidelines.” The Federal Reserve lifted and released restrictions on Wells Fargo earlier this month to help small businesses through the forgivable loan program.
Small Business Loans Are Exhausted: Here's What Owners Need To Know Now
JP Morgan (JPM) declined to comment on the lawsuit. However, a spokeswoman said that Chase Business Banking, which targets smaller companies with sales of $ 20 million or less, has funded more than twice the amount of loans than the rest of the bank combined.

JPMorgan said that 80% of Chase Business Banking’s PPP loans were for businesses with sales of less than $ 5 million. More than 60% of these PPP loans went to customers with fewer than 25 employees. JPMorgan announced that more than 40,000 processed and fully reviewed applications could be submitted to the SBA, which would provide additional $ 7.3 billion to small business customers.

The small business program was impacted by implementation issues that reflected the hasty rollout in the middle of the crisis.
It has recently emerged that large listed restaurant chains like Potbelly sandwich shop (PBPB), Shake shack (SHAKE) and Ruths Chris (RUTH) Steakhouses received these emergency loans – while Many small businesses have been closed. After thorough media scrutiny, Shake Shack announced it would return the $ 10 million loan received through PPP.

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