Four of the biggest banks in the US have been accused of prioritizing loan requests that would be the most profitable for the banks. Bank of America, US Bank, JPMorgan Chase, and Wells Fargo were all accused of allegedly not processing forgivable loans on a first-come-first-serve basis as instructed.
A number of California businesses are bringing these cases to civil court. The lawsuits claim each of these 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.” This is especially tough for businesses since the PPP loans ran out of funding early this month.
There has been a huge demand for these PPP loans to help small businesses keep employees on the payroll, pay rent, and other overhead expenses. Without these loans, businesses are being crippled by Coronavirus.
The news of the recent lawsuit is extremely important in the face of large, publicly traded companies like Shake Shack that have received emergency funding before smaller, private businesses. Luckily, due to an outpouring of public scrutiny, Shake Shack will be returning the $10 million loan they were granted.
Wells Fargo and JPMorgan did not comment on the lawsuit.
Bank of America said to CNN, “while we disagree with these allegations, we are fully focused on processing applications so they are ready to be submitted.”
US Bank told CNN “the lawsuit is ‘without merit’ and the SBA data cited ‘is not reflective’ of the bank’s “practices or results.’”