Bank alleged to CHASE fees instead of PPP Rules.
After the first round of small business loans ran dry under the Payroll Protection Program (PPP), small businesses banking at JPMORGAN CHASE & CO. (CHASE) cried foul according to three lawsuits now pending at federal courts in New York, Dallas and Chicago. The lawsuits accuse CHASE of shuffling the priority of applications in contravention of a Small Business Administration (SBA) rule which required lenders to process the applications on a first-come, first served basis.
Corporate greed according to these lawsuits. Banks lending money under the PPP program were entitled to loan origination fees based on a percentage of the total loan amount, not for example, the number of applications processed. So the higher the loan amount, the larger the origination fee. Shuffle the priority to your biggest customers first so that the largest loans will generate the largest fees if the money runs out. And if the money does run out, which it did, CHASE could simply blame the government for not funding the program properly. These Plaintiffs say the numbers do not lie--comparing the SBA loan data from April 13, 2020 and April 16, 2020 shows banks prioritized larger loans first. This alleged scheme might never have been exposed had the PPP program not run out of money so quickly the first time around.
Oops, CHASE did it again?
On Monday April 27, 2020, the second round of PPP funding was made available for those applications that did not make the cut during the first round. But on April 23, 2020, the SBA added a rule retroactive to the first round. All banks were limited to 10% of the total current PPP funding or $60 billion. So if CHASE processed their biggest loans first and those first round loans approached or exceeded $60 billion, CHASE could be saying "sorry, we could not process your loan" to thousands of additional small business Plaintiffs.
Since 2013, Windy City Trial Group has represented small to mid-sized businesses from across the United States and Canada that are sued in federal and state court in Chicago.