12:34pm PT by Ashley Cullins
Banks Hit With Suit Over Paycheck Protection Program Loan Fees
The country's largest banks are being sued for allegedly failing to pay as much as $3.8 billion in required fees in connection with the Small Business Administration's Paycheck Protection Program.
About $659 billion in forgivable loans will be issued through the PPP program and and banks are set to receive a processing fee of 1-5 percent based on the size of the loan. The suit alleges that the program also includes compensation of 0.25-1 percent for agents, such as attorneys, accountants, brokers and consultants and the lenders are refusing to pay up.
American Video Duplicating, Tush Law and Cal State Financial are suing Citibank, US Bank, JPMorgan Chase, Wells Fargo, Bank of America, MUFG Bank, Union Bank of California, PayPal and others.
According to the suit, which was filed Monday in California federal court and is posted below, each of the plaintiffs spent between 50 to 100 hours familiarizing themselves with the Act and another two to 10 hours on each application.
The proposed class is defined as: "All agents as defined by the SBA Regulations that facilitated small businesses to receive a loan under the PPP, i.e., met the criteria for eligibility and were not otherwise ineligible, between Feb. 15 and June 30, 2020, who timely applied for a PPP loan through various banking institutions and were processed and approved for funding."
Plaintiffs are seeking a declaration that about 19.14 percent of administrative fees paid to the banks (amounting to more than $3.8 billion by their calculations) should be deposited into a fund within 60 days so it can be distributed to agents who handled the corresponding loans. They are being represented by attorneys from Geragos & Geragos, Graylaw Group and Dhillon Law Group.