Multiple class-action lawsuits accused three of the biggest banks in the country of prioritizing existing corporate clients over small businesses seeking loans under the coronavirus relief bill, Politico reports.
JP Morgan Chase, Bank of America, and Wells Fargo were hit with lawsuits in California on Sunday after small business owners say the banks “concealed from the public that it was reshuffling the PPP applications it received and prioritizing the applications that would make the bank the most money.”
“Had [the bank] been honest, small businesses could have (and would have) submitted their PPP applications to other financial institutions that were processing applications on a first-come, first-served basis,” the complaints say.
The banks denied any wrongdoing.
“We funded more than twice as many loans for smaller businesses than the rest of the firm’s clients combined,” Chase said. “We have different lines of business that serve different types of clients. Each business worked separately on loans for its customers. … Our intent was to serve as many clients as possible, not to prioritize any clients over others.”
Big business got big aid:
Though the loans were intended to help small businesses, the Associated Press reports that 75 companies, including ones worth more than $100 million, received a combined $300 million in small business loans under the program.
About 4,400 companies received loans of $5 million or more, including big restaurant chains like Shake Shack, Ruth’s Chris Steak House, Potbelly, and Taco Cabana.
Shake Shack announced on Monday that it would return the $10 million loan it received.
Congress to reup program:
Congress is expected to pass a bill adding more money to the small business fund as soon as Tuesday.
Congress previously approved $350 billion for the program, which ran out in a matter of days.
Republican Florida Sen. Rick Scott said the banks had set requirements that were not in the law.
"I have heard from many constituents that they are unable to access the loans at their bank because of requirements individual banks are setting," he told CNN. "These requirements were not in the law and are leading to many small businesses having a very hard time accessing these dollars. Congress must make it clear that banks should not and cannot set these requirements that actively withhold help from those in need."
