Rifkin Weiner Livingston LLC has filed an amended complaint against Bank of America (BoA) for allegedly giving its lending clients a higher priority and denying or limiting access to the Paycheck Protection Program (PPP) to its depository clients and other small firms, according to a press release.
The law firm noted that the bank updated its policy on April 4 by letting depository-only customers apply for PPP loans after the filing of a class action compliant. However, the law firm said the bank added another requirement: Depository-only clients couldn’t have a credit card or loan with another bank.
“Nothing in the CARES Act authorizes or permits defendants to pick and choose who would gain access to or benefit from the federally backed lending program,” Rifkin Weiner Livingston LLC said in the announcement. “And, the priority of access to these limited ‘first come, first served’ funds is material — the demand is overwhelming as America responds to the economic tsunami of COVID-19 upon small businesses. BoA had no legal authority under the CARES Act to deny access, restrict or otherwise impede the access of small businesses to these critically important business-saving funds nor did BoA have the legal right or justification to make certain classes of small businesses go to the back of the line or be selectively denied access to the line at all.”
The PPP offers loans guaranteed by the government to provide for eight weeks of payroll and other costs to provide relief from the economic effects of the coronavirus pandemic. Those are forgivable if companies maintain their staff, for the most part, and use the loans for costs that are covered, like rent and utilities. The loans are currently only available via financial institutions (FIs) that participate in the Small Business Administration (SBA) lending programs as it stands.
Large banks have the personnel and size to move money to many small- to medium-sized businesses (SMBs). BoA has said that approximately 171,000 clients have asked for payroll loans valued at over $32 billion. Wells Fargo will only contemplate making payroll loans to nonprofits as well as current clients that have less than 50 workers while it will only offer $10 billion with the program.
JPMorgan Chase & Co., which has over 4 million small business customers, began taking applications Friday from firms that possessed a checking account with the FI.