A federal judge has ruled that Bank of America (BoA) can prioritize its own customers in distributing loans for the $349 billion Paycheck Protection Program (PPP), according to a Bloomberg report posted by Yahoo Finance.
The decision comes as several Maryland businesses, including a security company, an auto parts maker and a hair salon, sued the bank, alleging that BoA had rejected their applications for loans because they hadn't dealt with the bank for other loans in the past.
U.S. District Judge Stephanie Gallagher in Baltimore denied the request for a restraining order against BoA, although she allowed the lawsuit to move forward.
According to Gallagher, the Coronavirus Aid, Relief and Economic Security (CARES) Act, passed for $2 trillion in aid to various parts of the economy, didn't impose any restrictions on how banks could act in processing the loans, and Congress didn't rule that businesses could bring civil suits against lenders over those processes.
Gallagher acknowledged that the bank's rigid process would likely make it harder for some businesses to access the funds, but she said the responsibility to address that would fall to Congress rather than her jurisdiction.
A BoA spokesperson said the bank would remain focused on processing the giant 300,000 loan pile it had been dealt, which encompassed over $45 billion total in loans.
The plaintiffs, represented by attorney Alan Rifkin, will continue to press on with the suit, seeking to use their rights to access the critical funds.
The PPP, since its passing in March, has seen businesses facing problems and delays in getting the money, and bankruptcy filings have soared in response. The program offers forgivable loans of as much as $10 million to hopefully keep the doors open and employees paid while the coronavirus continues to mandate a shutdown of most businesses.
Unemployment requests have surged in the past several weeks to almost 17 million as people find themselves out of work.
The PPP overall has already seen $247 billion in loans given out all over the country thus far as of Wednesday (April 15).