CHARLOTTE, N.C.–Just days after the new federal government program was launched, a lawsuit has been filed against Bank of America for giving its loan customers a higher priority or for limiting access to the Paycheck Protection Program.
The $349-billion Paycheck Protection Program, or PPP, offers loans up to $10 million to businesses with 500 employees or fewer to cover payroll costs. If companies fulfill terms of the loan, which are made through the Small Business Administration, the loans are forgiven.
Bank of America had initially announced it would give priority to those customers with which it had loan relationships, but after significant criticism, it dropped that policy. But that hasn’t stopped a lawsuit from being filed.
Rifkin Weiner Livingston has filed an amended complaint in the suit it filed in a Maryland federal court against BofA, according to a statement released by the firm.
Can’t ‘Pick and Choose’
In its statement, the law firm noted that the bank updated its policy on April 4 by also permitting deposit-only customers to apply for PPP loans after the filing of a class action compliant. However, the law firm said the bank added another requirement: Deposit-only clients couldn’t have a credit card or loan with another bank.
“Nothing in the CARES Act authorizes or permits defendants to pick and choose who would gain access to or benefit from the federally backed lending program,” Rifkin Weiner Livingston LLC said in the statement. “And, the priority of access to these limited ‘first come, first served’ funds is material — the demand is overwhelming as America responds to the economic tsunami of COVID-19 upon small businesses. BofA had no legal authority under the CARES Act to deny access, restrict or otherwise impede the access of small businesses to these critically important business-saving funds nor did BofA have the legal right or justification to make certain classes of small businesses go to the back of the line or be selectively denied access to the line at all.”
$40 Billion in Requests
U.S. District Judge Stephanie A. Gallagher had given Bank of America until close of business on Wednesday to the plaintiffs’ motion, which seeks a temporary restraining order and preliminary injunction forbidding the bank from placing restrictions on PPP applicant eligibility other than what’s specified in the CARES Act.
According to Bank of America, it has received approximately 250,000 applications representing $40 billion in loan requests in the first few days of the program.
BofA Donating $100 Million
Separately, Bank of America will donate $100 million to help communities hurt by the coronavirus pandemic, the bank reported.
The money will go to both local and national organizations, the bank said, to help increase medical capacity, address food insecurity, and boost access to learning in the wake of school closures, The Charlotte Observer said.
“We must all work together as one global community – public and private sectors, as well as individuals – to address this healthcare and humanitarian crisis,” Bank of America CEO Brian Moynihan said. “This is a war. We’re in a war to contain this virus.”