Home Business Scramble among businesses for coronavirus stimulus loans spills into court

Scramble among businesses for coronavirus stimulus loans spills into court

(CNN)Some businesses unable to access stimulus loans may have to keep waiting.

A federal judge allowed Bank of America this week to continue its process of doling out coronavirus relief loans to its existing customers before other applicants, in one of the first notable court cases to interpret the $2 trillion stimulus bill passed by Congress last month.
The fast-moving court case highlights the scramble and roadblocks businesses have faced in getting access to money Congress authorized to help them. In the Bank of America case, the judge put the responsibility back on Congress to address consequences of the law.
Bank of America blocked some businesses — including a public relations firm, a hair salon, a bar security company in Maryland and a car roof-rack seller in Connecticut — from getting loans because they hadn’t borrowed from the bank before. The businesses took their problem to court. But in an early ruling, a federal judge determined that the businesses couldn’t stop the bank’s choice of whom it would lend to at this time. The businesses are appealing, though they note that the available stimulus funds could run out in weeks or days.
“Covid-19 has wreaked havoc on this country, and the global economy, which motivated Congress to enact the CARES Act. BofA’s rigid eligibility criteria have undoubtedly made it materially harder for some small businesses to access” the loans, Judge Stephanie Gallagher wrote in the opinion.
“However, given the competing policy interests, the need to balance the desire to assist the widest swath of small businesses with the need to incentivize lender participation, and the overall fluidity of this epidemic, Congress is better positioned to remedy any defects in the CARES Act.”
Bank of America started accepting loan applications from businesses about two weeks ago, allowing at first just its customers who had previously borrowed from the bank, then those with whom it had other banking relationships to apply, according to the court record.
The businesses sued for access to the loans on April 3, alleging the bank was selecting only borrowers it knew as a way to reduce risk. “BOA should not be permitted to flout the purpose of crucial, emergency legislation to aid American small businesses, and instead illegally manipulate the (loan program) for its own greedy purposes, using taxpayer money to reduce the default risk to BOA’s loan portfolio,” the businesses argued in another court filing Wednesday.
Other businesses have also brought lawsuits over access to the coronavirus loans. Strip clubs and political consultants that were barred from accessing the Small Business Administration’s loans are also trying to get access to the funds by asking the courts for help.
SBA is expected to run out of money in its Paycheck Protection Program in a matter of hours, and Republicans and Democrats are at an impasse over how to provide more funding for the program.

Read More


Please enter your comment!
Please enter your name here

Most Popular

DHS Secretary Sets the Record Straight on Fake News on Portland Riots

Chad Wolf, acting secretary of the Department of Homeland Security, hit back at a press conference in DHS headquarters in Washington, D.C. on Tuesday against media reports that the Trump administrati…

Trump Raises $20 Million in First-Ever Virtual Fundraiser

President Donald Trump raised an eye-popping $20 million on Tuesday night in his first-ever virtual fundraiser, from a total of more than 300,000 individual donors who participated. This is a great …

ACLU: Constitution Requires Illegal Aliens Count Toward Congressional Apportionment

The American Civil Liberties Union (ACLU), as well as other migration lobbying organizations, claims it is “unconstitutional” not to count illegal aliens when apportioning congressional representatio…

US House poised to vote on reversing Trump’s Muslim ban

The United States House of Representatives is set to vote on Wednesday on legislation reversing President Donald Trump's controversial ban on immigration from Muslim countries. The bill, called the …

Recent Comments

Business and Economic News :: Debtly