Prestamos PPP Loans Class Action Lawsuit Overview:
- Why: Plaintiffs accuse Prestamos of pocketing government fees for PPP loan applications, but never funding the applicants.
- Who: Small business owners sued Prestamos, a lending company.
- Where: The class action lawsuit was lodged in Pennsylvania federal court
Three small business owners lodged a class action complaint against the lender Prestamos for exploiting the Paycheck Protection Program (PPP) for its own gain by collecting fees but failing to pay out loans as promised.
The lead plaintiffs are Alicia Marshall, Daniel Pronsky, and Paris Townsend all of whom lost significant income due to the coronavirus pandemic, subsequently applied and were approved for a PPP loan with Prestamos in early 2021, but say they never received their funds.
The class action lawsuit argues that Prestamos’s failure to fund these Small Business Association-approved PPP loans directly harmed Marshall’s in-home healthcare business, Pronsky’s barbeque catering business, and Townsend’s hair care products business.
Marshall, Pronsky, and Townsend seek to represent a national Class of persons and entities in the US who, in 2021, timely applied for PPP loans with Prestamos, but did not receive loan proceeds despite approval, as well as a similar California subclass.
Prestamos Fails to Pay Up on PPP Loans
Marshall, Pronsky, and Townsend each received Small Business Association (SBA) approval on their PPP loan applications and a promissory note regarding the loans.
Despite properly completing, signing, and submitting the required loan documents and multiple attempts to obtain the loan proceeds, they never received their loan funds, says the class action lawsuit.
Marshall even checked with her local SBA office about the loan; the SBA had information of her loan, its approval, and alleged disbursement, although she still hadn’t received the money.
Many other borrowers have complained about not receiving their due funds from Prestamos on the Better Business Bureau’s website and various social media sites.
Under PPP loan provisions, Prestamos should have funded these loans within 10 days of SBA approval. Unfortunately, despite its designation as a Community Development Financial Institution (CDFI), which indicates its dedication to “helping economic growth in underserved areas,” Prestamos failed to follow through on many small business loans it processed.
Prestamos Allegedly Used PPP Loans to Make Itself Money Instead
As an authorized PPP lender, Prestamos was entitled to receive fees from the SBA for each PPP loan it processed. In 2020, Prestamos processed nearly 1,000 PPP loans, reportedly receiving $1.3 million in fees from the SBA, according to court documents.
In 2021, after the SBA increased its fee rates, Prestamos processed nearly 500,000 PPP loans through May 31, 2021. So far, this outstrips all other lenders in 2021, and is more than the total number of PPP loans made by Bank of America, PNC Bank, TD Bank, and Wells Fargo combined, according to the complaint.
Thanks to that substantial amount, Prestamos has reportedly received nearly $1.2 billion in fees in 2021.
The plaintiffs seek compensatory, consequential, and other damages; prejudgment interest; restitution and all other forms of equitable monetary relief including all PPP loan proceeds owed; disgorgement of all fees Prestamos obtained; punitive damages; and reasonable court costs.
Did you apply for a PPP loan from Prestamos or another lender but never received your money? Let us know in the comments section below!
The plaintiffs are represented by Lawrence J. Lederer, Michael L. Murphy, and Patricia M. Kipnis of Bailey & Glasser LLP and Justin A. Heller and Matthew M. Zapala of Nolan Heller Kauffman LLP.
The Prestamos PPP Loans Class Action Lawsuit is Marshall, et al. v. Prestamos CDFI, LLC, Case No. 2:21-cv-04337, in the U.S. District Court for the Eastern District of Pennsylvania
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136 thoughts onPPP Loans Exploited by ‘Community Development’ Lender Prestamos, Lining Pockets With $1.2B
I was approved for 17500 chime bank was funded and chime sent it to the IRS. I never received the loan after many calls and emails to sba reps .