Bank Of America’s PPP Loan (Payroll Protection Program) Program Is A Horrible Mess
Early on, Bank of America was the focus of a lawsuit because the banking giant was not properly processing the Payroll Protection Program Loans that were applied for as million of businesses were being impacted by or fearing impact of the Coronavirus. The Charlotte Business Journal wrote:
Four businesses filed a lawsuit against Charlotte’s Bank of America Corp. (NYSE: BAC) on Sunday, criticizing the way it handled loan applications for the Small Business Administration’s Paycheck Protection Program. The suit was filed in federal court in Los Angeles.
The lawsuit alleges BofA prioritized applications for higher loan amounts because those would generate more origination fees for the bank. The SBA previously said PPP applications would be accepted and processed on a first-come, first-served basis.
“BofA has, once again, prioritized corporate greed at the expense of its small business customers,” the suit reads. “Had BofA been honest, small businesses could have (and would have) submitted their PPP applications to other financial institutions. … As a result of BofA’s dishonest and deplorable behavior, however, thousands of small businesses that were entitled to loans under the PPP were left with nothing.”
During the frantic push to get financial shelter from COVID-19, the Small Business Administration (or SBA) had one program for economic help during disasters called “Economic Injury Disaster Loan”. I signed up for the program, but received no word back. I didn’t even get an acknowledgement of my application.
Then, the PPP program was advanced, and I applied twice (filled out the application twice because they were not acknowledging my entry) and it asked me if I was eligible for the “economic help during disasters” or “Economic Injury Disaster Loan”, between January and April, and I said yes (why would I not?). I also had not received the Economic Injury Disaster Loan I applied for.
And what was the EIDL (Economic Injury Disaster Loan) described as, you ask? This:
In response to the Coronavirus (COVID-19) pandemic, small business owners, including agricultural businesses, and nonprofit organizations in all U.S. states, Washington D.C., and territories can apply for an Economic Injury Disaster Loan. The EIDL program is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to coronavirus (COVID-19).https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loans
So, the PPP I got was part the EIDL I should have received, or so I understood that case to be, since both were related to the Coronavirus problem.Now, Bank of America is saying that I got an EIDL, and the PPP contained an “additional” EIDL amount of money to refinance the EIDL they say I got – but I never got even though I applied for it, too. Now, they want me to give back something that I never got out of the PPP money Zennie62Media received and disbursed to contractors. And in 10 days!
Bank of America made so many changes in the PPP Loan Application it wasn’t funny, and eventually set up an online portal for business clients. The complicated stuff about seeking a refinancing of a loan I did not get was not said then – they simply asked if Zennie62Media was eligible, which means we should get one. And a simple ask at that, since we didn’t have one, and the SBA was not responsive because it was slammed. I guess memories are short.
So now, Bank of America asked to go into my account and, of the $23,750 PPP Loan, get the $10,000 in what B Of A is calling “extra money” that in point of fact I never got – and gave me the choice, “yes”, to allow it to get it, or “no”. There was no “HELL NO” option. If so, I would have selected it, especially since Bank of America’s attempted action to me is based on a rule that did not exist when I applied for the PPP and received the loan, EIDL and all, on May 4th, 2020. Yep, you read that right.
And to add to that, we’re talking about my firm, Zennie62Media, a Delaware c-corp approved December 30,2019, and with a Certificate Of Good Standing from the State of Delaware. A firm that’s paid out several thousand dollars to my family of vlogger contractors, some who are disabled or between full-time jobs, and really needed and got another way of making money and having fun in the process.
What’s SBA Procedural notice 5000-20032: Refinance of EIDL Loans with PPP Loan Proceeds and Lender Remittance of EIDL Refinance Proceeds to SBA?
According to an online document I found called “SBA Procedural notice 5000-20032: Refinance of EIDL Loans with PPP Loan Proceeds and Lender Remittance of EIDL Refinance Proceeds to SBA”, “The purpose of this Notice is to provide guidance for when Paycheck Protection Program (PPP) loan proceeds must be used to refinance SBA Economic Injury Disaster Loans (EIDL) and to inform PPP Lenders of the procedure for remitting to the SBA any PPP loan proceeds designated for the refinance of an EIDL.”
And then it goes on to provide rules for handling of an EIDL in a refinancing situation that I was not involved in. And then, here’s the kicker: the entire SBA Procedural notice 5000-20032 was effective June 19th, 2020 – a good month after I received my PPP Loan on May 4th, and a full two months after I applied for it. https://www.sba.gov/sites/default/files/2020-06/5000-20032-508.pdf
So, not only did the SBA notice not exist during the frantic frenzy to get money out to help people (ostensibly) during the early days of the Pandemic’s economic impact, it also does not call for Bank of America to go raiding someone’s bank account to get money they never received to refinance in the first place!
As explained in an August 4th 2020 Journal of Accountancy post by Ken Tysiac, a lender like Bank of America was supposed to do this: “…if a borrower received an EIDL advance in excess of the amount of its PPP loan. Lenders must notify the borrower when the first payment will be due, and the loan must be repaid by the borrower before the maturity date, either two or five years.” Not 10 days – and even then, the EIDL advance in my case was not in excess of the amount of my PPP Loan.
All of this seems to have been made just so lenders like Bank of America can get back some PPP Loan money. That even as Gerri Detweiler in Nav.com writes that “borrowers generally don’t have to repay an EIDL grant”!
Since Bank of America was sued for favoring the rich, the action its trying to take against me seems to be right along those lines, and criminal. And at that, Zennie62Media is one of a total number of black-owned businesses and black American that represented two percent of the total number of people and firms who got PPP Loans! 83 percent of the PPP Loans issued went to white folks.
Congress should write a bill or provision that helps save the little guy: simply terminate any rule that allows a Lender to try and take PPP Loan-related money back from an American who rightfully received it.
If that person or business followed all of the basic guidelines of the criteria for the PPP, fine – then leave them alone. EIDL money (It’s disaster related, right?) should simply be part of the PPP: if it’s forgiven, so be it – plus the whole program is to be terminated June of 2021, anyway (Why that is, is yet another mystery considering how many millions of people still need help in America?)
But this way where lenders like Bank of America are left to write “we understand how hard this is during this difficult time” before they take part of your money must be terminated. It will contribute to a wrecking of the American economy to a degree far worse than what we’re already experiencing now.