July 4, 2020
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Small Business Owners Sue Wells Fargo, JPMorgan Over Virus Loan Debacle

Small Business Owners Sue Wells Fargo, JPMorgan Over Virus Loan Debacle

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Several large banks sue small businesses who say that large business loans for treating coronavirus were a priority over small firms, who then could not gain access to much-needed funds.

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Wells Fargo, Bank of America, JPMorgan Chase US Bankcorp was named in the lawsuit, accusing them of processing applications for the largest loan amounts due to the huge fees that they will generate, instead of processing them in the order received by the order, the Trump administration said what will happen according Bloomberg,

Banks earned 5% commission on loans up to $ 350,000; 3% for loans between $ 350,000 and 2 million dollars; and 1% for loans between 2 million dollars and 10 million dollarsThat means they earned $ 17,500 for processing $ 350,000 loan compared to $ 100,000 for 10 million dollars credit. –Bloomberg

Lawsuits filed on Sunday in the Los Angeles Federal Court claim that thousands of small businesses Attempts to apply for the Wage Protection Program administered by the Small Business Administration remained nothing,

JPMorgan said in a FAQ on its website that small businesses received 2 times more loans than the rest of its customers combined, while other banks did not give any comments, according to the report.

Complaints are based on two SBA loan reports. One had data from April 3, when the program was launched until April 13, when about three-quarters of the funding for the program was announced. Another report shows data as of April 16, after funding was exhausted and the SBA stopped accepting applications.

The complaint states in the last three days, before the money ran out, loan applications $ 150,000 and less was processed at a double rate for larger loans compared to the initial report, assuming that the largest loans were loaded firstBut the SBA did not release data showing loan activity by the lender, or how many loans and what loan amounts were processed each day. –Bloomberg

PPP, who ran out of money last week, offered loans of up to $ 10 million, guaranteed by SBA and available through lenders. If a company can keep employees on wages and cover rent and other approved expenses, loans become a grant.

On Monday, the Shake Shack burger chain announced that they would returning 10 million dollars they were obtained through PPP after the outrage of large enterprises and hedge funds that have access to a program designed to save small enterprises during the coronavirus pandemic.

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