On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law.  As a part of the CARES Act, Congress allocated $349 billion in funds to the Small Business Administration (SBA) for small businesses to obtain loans to cover payroll expenses and avoid mass layoffs.  Under the SBA Payroll Protection Act (PPP) directives, private banks were instructed to begin taking applications on or about April 10, 2020, and to collect payroll data from small business owners in order to qualify their loan applications for submission to the SBA.  Unfortunately, on April 16, less than 2 weeks after the program began, the SBA reported that all $349 billion in relief funds had been exhausted.  For many small business owners, this was before they could even submit an application and payroll documentation to their bank.

In a lawsuit filed April 20, 2020, in the United States District Court for the Central District of California, the owner of Outlet Tile Center, a California Sole Proprietorship, has alleged that JPMorgan Chase & Company misled small business owners and inappropriately prioritized applications for large corporations.  This led to an immediate exhaustion of PPP funds and allowed Chase to profit over $700 million in just two weeks for processing a handful of applications.  Plaintiff Outlet Tile Center further alleges that Chase, on its own website, promised that PPP loans would be processed on a “first come first served” basis.  What has come to light is that Chase may have solicited PPP loan applications from its best and highest value clients before making applications available to small business owners.  In fact, the average PPP loan approved through Chase was for clients with average yearly payrolls of $2,437,429.00.  This appears to have been done not only for the benefit of its favored depositors, but to minimize the number of applications Chase had to process while maximizing the processing fees it could collect.

The Plaintiff in this suit is similarly situated to thousands of small business owners that were long time and loyal customers passed over by Chase.  Additionally, we believe that the system established by the SBA for the PPP loan program allowed every private bank and credit union the opportunity to manipulate the application process in favor of big its depositors.  As small business owners begin to see layoffs and permanent closures, it is time to take a close look at the fairness and legality of this system.

If you are a small business owner that has been denied a PPP loan you may a cause of action against your bank and the SBA.  Contact us immediately at (904) 358-3300 for a free consultation with one of our experienced civil litigation attorneys to discuss your legal rights.

Source: United States District Court, Central District of California, Case No.: 2:20-cv-03603

Banks Accepting PPP Loans Applications

  • National Banks: Bank of America, Capital One, Citibank, U.S. Bank, and Wells Fargo
  • Region Banks: Ameris Bank, Atlantic Capital, BancorpSouth, BankUnited, Blue Ridge Bank, Celtic Bank, CenterState Bank, CIT, Citizens Bank, Comerica Bank, Fifth Third Bank, FirstBank, FirstHome Bank, First Horizon, Fulton Bank, KeyBank, M&T Bank, Midwest BankCentre, Old National, Peapack-Gladstone Bank, Pinnacle Bank, PNC Bank, Silicon Valley Bank, Stearns Bank, Sunrise Banks, TD Bank, Truist, Umpqua Bank, Univest Bank and Trust Co., and West Town Bank & Trust
  • Credit Unions: America First Credit Union, Navy Federal Credit Union, Pentagon Federal Credit Union, and VyStar Credit Union