Class Action Lawsuit Filed Over Bank of America’s Alleged Refusal to Accept Paycheck Protection Program Loan Applications, Unless Small Businesses Are Active Bank of America Borrowers
Kehoe Law Firm, P.C. is making small business owners aware that on April 3, 2020, a class action lawsuit was filed against Bank of America, N.A. (“BOA” or “Bank of America”) in United States District Court, District of Maryland, for violations of the CARES Act, violations of the Small Business Administration’s (“SBA”) 7(A) loan program, a declaratory judgment, and a preliminary and permanent injunction.
According to the complaint:
The Paycheck Protection Program (“PPP”), which is part of the $2 trillion stimulus package created by the CARES Act in response to the COVID-19 pandemic that was signed in to law on March 27, 2020, empowers lenders to make available as much as $349 billion in government-guaranteed loans to cover eight weeks of payroll and other expenses.
BOA – creating an improper and unlawful restriction on PPP loans – is refusing to accept PPP loan applications unless the small business is an active borrower with BOA. BOA is thus unlawfully prioritizing existing customers who are active borrowers as of February 2020.
Indeed, BOA has denied access to the PPP program to small businesses that do not have a “lending” relationship with BOA. [The Plaintiff], which has a depository relationship with BOA, was prohibited by BOA from even applying for a PPP loan with BOA, despite meeting the statutory requirements for a PPP loan. [Emphasis added.]
There is, according to the class action complaint, “[n]othing in the PPP federal law allows for the differentiation of a small business loan under the federal program between a bank’s depository clients and their lending clients. And, nothing in PPP federal law allows for BOA to determine who can participate in the federal program based on that improper criteria.”
Small business owners who qualify for a loan under the Paycheck Protection Program and who were prevented from applying for a PPP loan by BOA, because they do not have a pre-existing debt relationship with Bank of America are encouraged to contact Kehoe Law Firm, P.C. to discuss potential legal claims.