Well Connected Businesses Are Gluttons At The PPP Trough
The economic destruction unleashed by the coronavirus pandemic is approaching unprecedented levels. In fact, the estimated unemployment rate as of late is approaching number not seen since The Great Depression.
Fortunately, Congress acted to pass the Paycheck Protection Program (PPP) to provide small businesses with the funds they need to keep employees on payroll and meet their obligations while they await a return to something approaching normalcy.
Unfortunately, it turns out the PPP has not been working as advertised. Instead of providing small businesses with the capital they need to stay afloat, the funds were quickly gobbled up by large multinational businesses with access to the nation’s most powerful banks. As stories trickled out, businesses such as Shake Shack were shamed into returning millions of dollars of assistance that was meant for the small businesses most affected by the COVID-19 lockdowns and reduced consumer spending.
Small businesses are not taking this lying down. A company in California has launched a class-action lawsuit against Wells Fargo, alleging that the financial behemoth prioritized the PPP applications of businesses seeking larger loan amounts, going against the first-come, first-served basis of the program.
Even when first-come, first-served was adhered to, many small businesses found that funds were already exhausted by the time they could gather the necessary information to put together a loan application. Larger businesses with established relationships with banks like Wells Fargo were able to leverage that into quickly submitting loan applications.
If your small business has come up on the short end of PPP it may be worth seeking the advice of a civil litigation attorney with experience pursuing class-action lawsuits.