Small-business owners sue Wells Fargo over handling of coronavirus relief package

A lawsuit filed on behalf of small-business owners Sunday accuses Wells Fargo of unfairly allocating small-business loans under the federal Paycheck Protection Program (PPP).

The lawsuit, filed by a California-based company, accuses the bank of prioritizing those applicants seeking larger amounts as opposed to the first-come, first-served approach that the federal government said would be used for PPP loans, according to USA Today. The Treasury Department’s $349 billion forgivable loan fund ran dry Friday.

The lawsuit accuses the bank of deliberately reshuffling the applications to ensure they received millions more in processing fees, citing Small Business Association data between April 3 and April 13 versus loan data from between April 13 and 16, when the program ran out of money.

“In the last three days of the PPP—banks processed loan applications for $150,000 and under at twice the rate of larger loans,” the lawsuit states, according to the newspaper.

If the bank had not given priority to larger loan applications, the lawsuit states, “the percentage change of applications submitted in the last three days of the program would be consistent among all application types.”

“Making matters worse, Wells Fargo concealed from the public that it was reshuffling the PPP applications it received and prioritizing the applications that would make the bank the most money,” the lawsuit claims.

Several other small businesses filed similar lawsuits against big banks over the weekend, according to USA Today. As recently as April 5, Wells Fargo said it remains committed to prioritizing businesses with 50 or fewer employees.

“While all businesses have been impacted by this crisis, small businesses with fewer than 50 employees and nonprofits often have fewer resources,” Wells Fargo CEO Charlie Scharf said in a press release earlier this month. “Therefore, we are focusing our efforts under the Paycheck Protection Program on these groups.”

A Wells Fargo spokesperson declined to comment to The Hill.

Updated at 10:45 a.m.

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