In the suit filed on Sunday, a cybersecurity firm and event planning company accused Chase Bank of prioritizing small business borrowers who were seeking larger loan amounts rather than processing the government-sponsored loan applications on a first-come, first-served basis as advertised.
The move meant that Chase and other banks would collect larger processing fees – nearly $6 billion in total – by frontloading the queue with businesses seeking higher loans, according to the lawsuit.
The businesses seeking lower loans were deprioritized, so many didn't get the aid they were entitled to, the lawsuit filed on behalf of small businesses said.
Eighty percent of PPP loans processed through Chase went to businesses with less than $5 million in revenue. About half went to small businesses with less than $100,000, the bank said.
The proof of Chase prioritizing larger borrowers lies in numbers provided by the Small Business Administration, the lawsuit alleges. In the past three days, before the PPP loan money ran out, banks allegedly processed loan applications for $150,000 and under at twice the rate of larger loans.
This would suggest that banks prioritized applications for the largest loans early on, otherwise "the percentage change of applications submitted in the last three days of the program would be consistent among all application types," the plaintiffs claim.