Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo are being sued by small business owners, who claim the big lenders unfairly favored companies seeking higher loan amounts under the government-backed Paycheck Protection Program.
Each bank “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,” according to language appearing in all four of the class-action lawsuits, filed Sunday in the U.S. District Court for the Central District of California.
“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 lawsuits say.
The plaintiffs say data in regular updates from the Small Business Administration suggest the banks front-loaded applications for larger loans and focused on loans for $150,000 and under at the tail end of the program before it lapsed.
SBA has released limited data showing granular loan activity by bank, making it hard to pinpoint how many loans and of what size each firm made on any given day.
JPMorgan declined to comment on the litigation but disputed that the bank had given priority to bigger clients in answers to frequently asked questions on its website.
“We funded more than twice as many loans for smaller businesses than the rest of the firm’s clients combined,” it 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.”
U.S. Bank also rejected the claims in the lawsuit. “We plan to vigorously defend ourselves as it is without merit,” the bank said in a statement. “The cumulative industry data provided by the SBA is not reflective of U.S. Bank’s practices or results. We continue to serve our small business customers and are prepared to process loans as quickly as possible should additional funds become available.”
Wells Fargo declined to comment but said it was “working as quickly as possible to assist small business customers with the Paycheck Protection Program.”
Bank of America did not immediately respond to a request for comment.
The Paycheck Protection Program exhausted all of the $349 billion set aside for loans last week, and Congress is negotiating additional funding. The National Federation of Independent Business released a survey on Monday that showed 80 percent of applicants in the program are still waiting for financial assistance.
A federal judge last week defended a controversial move by Bank of America to restrict the pool of small businesses that could receive PPP loans. The businesses that sued Bank of America are planning to appeal.