Chase PPP Lawsuit
Last week I wrote about my experience trying to get Paycheck Protection Program (PPP) loans for two of my small businesses. One of the businesses applied very early with Chase and the other with Bank of America. To this date neither business has received anything other than an automated email from the banks.
Anecdotally it seems that banks prioritized their huge clients. It makes sense if you think about it. The pool of money is limited and if the banks can give higher dollar loans then they potentially earn more money from origination fees and most importantly they would have to dedicate less resources to originating and processing the loans.
Chase PPP Lawsuit Filed in California
According to Yahoo Finance two companies have now filed a class action lawsuit against Chase for how they handled the Paycheck Protection Program. The two California companies accuse Chase of using unfair business practices when processing loans under PPP.
The lawsuit alleges lower value loans were deprioritized in favor of Chase’s big customers. On the bank’s PPP website, Jennifer Roberts the CEO of Chase Business Banking said the following about what happened with Chase’s rollout of PPP loans. Find the full letter to customers here.
I also understand that many of you are frustrated that you applied early in the process, but that SBA funding ran out before you could receive a loan. We want you to know that we are working to make sure as many of our Business Banking customers receive loans as possible. Our Chase Business Banking initial form went live on April 3rd. In the first hour more than 75,000 of our Business Banking clients completed our initial form – a number that grew significantly in the following days. We had more than two thousand Chase employees work over that weekend to review these forms, contact as many people as possible, and help position them to complete their application.
Chase goes on to provide the following stats about PPP loans they have administered:
- 80% of Chase PPP loans have been for businesses with less than $5M in revenue
- About half of Chase PPP loans have been for less than $100,000
- More than 60% of Chase PPP funds have gone to businesses with fewer than 25 employees
Did Chase Do Anything Wrong?
Anecdotal stories have come out about how banks gave their biggest customers early access to the programs and/or had private bankers work with them to get applications in while tens of thousands of other business owners waited to be contacted. I have heard from many business owners in the past week who had exactly the same thing happen.
Right now we don’t know how Chase and other banks really prioritized all of their customers and I don’t have an issue with them being required to prove it. Pretty much all of the big banks said they gave loans in a “first come first serve” capacity so let them show how that worked in reality. In the end though Chase and other banks were given a monumental task with this program and the funds would have run out either way.
Chase PPP Lawsuit – Bottom Line
Chase is being sued by two companies in California over their handling of the Paycheck Protection Program. While it still remains to be seen whether they did anything wrong, there is no doubt that many small businesses are left out in the cold for now without a loan or even contact from the bank they choose to do business with.
As I mentioned last week this has me reconsidering my banking relationships or at least expanding them to also include local banks with a more personal touch. What has been your experience with PPP? Share your thoughts below!
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We are a SMALL Business….we applied with Chase Bank on DAY 1. Didn’t get our approvals on the first go-around…still waiting! The second batch of money approved last week still has not helped us with our PPP Loan. Still NO calls from Chase. Just an email every FEW days to say….your application is basically in-line!
UGH…we are having a TOUGH TIME!
Chase totally failed me in the first round, my brother applied three days after me and got funded in the first round using a small bank. I was provided in writing from my Chase bank representative ” You are first in line” when and if new funding is available. Well new funding has come and no approval as of Wed. 4/29. I relied on their word that we were first in line and have serious doubts now that we will get funded in the second round. I had a friend that put his application in with a national bank on Monday 4/27 and got approval on Tuesday, signed documents and received funding today. Chase totally failed me to date.
Wouldn’t it have made a lot more sense to FIRST have the SBA review and approve loans–and THEN let the banks know who had gotten the green light? Having Chase and other mega-financial brethren make the initial recommendations is like having the fox guard the chicken house!! Of course they’d give their biggest customers the seal of approval. First axiom of marketing: Reward your best customers–and that’s exactly what they did.
DUH!!!
I am a CPA that helped many clients file and obtain loans under the PPP program. As a general rule we would apply for the clients at the bank where they have a relationship. This was great when working with small banks that were nimble to move. Unfortunately one of my businesses has a banking relationship with Chase Bank and that is where I and anyone that I knew, who had problems, were left with no funding, no communication until days later, and a bunch of excuses. We submitted our loan application within 12 hours of their system going live and they sat on it until the funds dried up. I had negative feelings towards Chase Bank and their lack of service before this and now I am severing any current or future relationship with them.
Totally!!!
Everyone I know that applied the same I did at Washington trust, numerica and Umpqua got loans. No one I know got a ppp loan through chase! Took 9 days for them to inform me that they were in the in the 2nd phase of the loan process. Everything up to this point has been completely automated. Nothing to indicate that my app has even been looked at. Inquired on first day, applied on first business day available. Was notified that they were reviewing docs. Nothing indicates that is true. This notice came after funds were already gone. Doesn’t look like I will be approved before the next phase of funding comes out. Clients of Numerica I know were funded as early as 3 days from applying. 2 were people who applied nearly a week after I did. discouraged!!!
You will not be funded. l applied immediately when the Chase process was open with a Chase banker we have had a relationship with. We have another banker with Chase that said he saw I was at the head of the line and asked how I did it.. We were told we would get money in 1 to 3 days then they came back and said 5 to 7 days and then after 7 days I got an email saying money was gone. They said they were continuing to process applications anyway. I insisted on knowing where we were at and was told in the middle of 300,000 companies. They can only do 12K a day. We won’t be approved this time either. Now today Jamie Dimon came out with a statement saying small businesses don’t go through Chase they won’t get you through. There are two class action suits going on. I want to join them. Does anyone know how? The least they could have told us was that they never planned on getting the little guy through. We have 20 employees. Already started layoffs.
I experienced the same scenario and was told the same thing through Chase. It is worse to hear that you will be funded in 1 to 3 days, than to not hear anything at all. I started to bring folks back to work, assuming that it was coming. Now I’m going to have to find an alternative route during these challenging times.
As a CPA who assisted many clients with obtaining their PPP loans at many different banks, I can testify first hand that Chase is the worst of the many banks I have worked with. While most of my clients at other banks have received approval and their funds, my CPA firm unfortunately banks with Chase and although we applied on the day the application was posted our application is still “in progress”. My very wealthy clients who bank through Private Banking at Chase were approved and funded with in days of their application submission. However my clients as well as my firm’s application which is administrated through Chase Business Services did not get through in time before funds ran out. I was told they only got through 20% of their applicants in this department where the departments who handle the large clients for Chase were 100% submitted in the first round before funds ran out… Here is a sad example of what was not suppose to happen with these funds. I hope Chase is able to do a better job in round two if/when it is approved by the SBA. I am very disappointed by the lack of service Chase provided and the losses that resulted to it’s customers as a result of their inability to service their clients. While I understand the intense pressure this program put on the banks, I saw first hand how badly Chase has failed as compared to their peers who rallied and succeed for their clients in this area to a much greater degree.
Thanks for sharing your experience Lynn.
Another frivolous lawsuit. Banks in the first place were not required to participate in PPP nor were they required to accept and process applications according to the order they were received in if they participated. It’s the right of the bank to prioritize customers who can be vetted and who actually are good profitable customers for the bank. There is no legal basis for this lawsuit.
I’m still waiting on my regional bank to to get me my SBA number to show that I’m at least in line for the next round. I don’t want to miss out again but we’ll see what happens.
As to big customers getting priority, that’s a crock of s–t. The most basic premise here is to help small businesses rather than large ones. Then there’s the fact that if banks did do this, it’s basically a repeat of what they did regarding covering checks in a bank account where they would send the biggest through first, then the other checks would bounce because there was no money left. Customers were stuck with huge overdraft charges. I’d like some proof that banks are not doing the same to customers again.
I believe it was not first come first serve. I placed my info for PPP within minutes of website opening and never got a reply from Chase for 5 days and have not seen a dime. I have been a Chase customer for 7 years and have receipts of 3-4 million and I am not a “valued customer” even though I have never missed a payment on anything, I could not even get a loan to purchase a used Truck from Chase even though truck was worth more than loan.
I guess I wonder why a small business wouldn’t have done business with a local bank to begin with?
It wouldn’t have anything to do with miles and points would it?
And on a related topic.. Chase hosed you but you still have their C.C. adds running… hmmmm. something doesn’t add up here.
Killing off Chase affiliate links would be counterproductive. Because he got hosed, Shawn is supposed to get rid of a massive source of revenue? “You burned me, so I’m going to make myself suffer” seems a dubious idea IMO, but what do I know?