Why Aren’t PPP Loan Lenders Compensating Agents?

A proposed class action lawsuit accuses banks of failing to pay a feeto individuals who assisted small businesses with applying for Paycheck Protection Program (PPP) loans as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

PPP loan lenders including ServisFirst Bank Inc. and Synovus Trust Company have refused to pay accountants, lawyers, loan brokers, and others who helped small businesses prepare and submit their PPP applications, according to the lawsuit.

What Are PPP Loan Lenders?

The Paycheck Protection Program (PPP) is part of the Trump administration’s $2 trillion CARES Act designed to bolster the U.S. economy enough to survive the coronavirus pandemic. However, within just a few weeks, the PPP’s funding was already gone, much of it reportedly to large corporations instead of the small businesses that were relying on that money, according to CNN. So far, there have been several class action lawsuits filed over this issue on behalf of small businesses.

A second infusion of funds into the PPP helped alleviate some of the problems for small businesses. Major issues remain, however. While PPP loan lenders are receiving fees for their part in administering the loans, the agents who assist borrowers may not be.

Lenders participating in the PPP loan program are institutions like Bank of America, JP Morgan Chase, and Wells Fargo. The banks process PPP applications and subsequently fund loans for borrowers whose applications are accepted. The PPP loan lenders work alongside PPP agents (generally accountants and attorneys) who help borrowers prepare and submit the information required in their PPP loan application.

How Does PPP Application Compensation Work?

Agents who help borrowers prepare and submit their PPP applications are supposed to receive a fee from the PPP loan lenders.

According to the terms of the Paycheck Protection Program, lenders are to receive a processing fee ranging from 1 percent to 5 percent of the loan amount and agents (defined as accountants, attorneys, consultants, and others who assist/prepare a potential borrower’s application for PPP financial relief) are to receive a fee of between 0.25 percent and 1 percent, depending on the loan amount.  also supposed to receive a similar fee.

Agent fees are listed as follows:

• 1% on loans below $350,000.00
• .5% fee on loans between $350,001.00 and $2,000,000.00
• .25% fee on loans above $2,000,001.00

What Can You Do if Your PPP Agent Fee Wasn’t Paid?

Unfortunately, some agents working with borrowers to complete PPP applications may not be receiving the fees they are due.

In response, several class action lawsuits have already been filed in a number of states alleging lack of payment by PPP loan lenders to PPP agents.

Does the CARES Act Protect You?

The CARES Act’s protections for PPP agents is complex, and it’s currently unclear where courts will fall on whether or not PPP agents have a private right of action to sue in these cases, or if they will concede that congressional intent clearly allows for PPP agents to be able to sue if lenders don’t compensate them.

Should You File a PPP Loan Lenders Lawsuit?

If you have done work as a PPP agent on behalf of borrowers seeking funds under the CARES Act, but you have not been compensated with an agent fee by the PPP loan lender, you may be able to file a lawsuit and pursue compensation. One of the most important aspects of strengthening these cases is ensuring you properly document your written request for your agent fee.

Before filing a lawsuit, your first step should be attempting to communicate with the PPP loan lender about the issue. If that fails, retaining counsel may be necessary.

Filing a lawsuit can be a daunting prospect, especially against a powerful bank, so Top Class Actions has laid the groundwork by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.

Join a Free CARES Act Class Action Lawsuit Investigation

If you are an agent who helped prepare and/or submit a PPP application but were not paid by the lender as required by the PPP, you may have a legal claim.

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This article is not legal advice. It is presented
for informational purposes only.