Unpaid Agent Fees Lenders Owe CPA’s
Leading national law firm in bank and credit union litigation McCune Wright Arevalo, LLP, has recently filed against several banks arising from their refusal to pay CPA firms agent fees for assisting clients in preparing applications for PPP loans under the CARES Act. McCune Wright Arevalo is committed holding national banks, regional banks, community banks and credit unions accountable to compensate local CPA’s under this Act through class action lawsuits.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed in response to the economic downturn and devastation to small and mid-sized businesses caused by the pandemic. Passed in two parts, it allocated $649 billion in to assist these businesses in keeping their workers employed. Known as the Paycheck Protection Program (PPP), the initiative provides 100% of federally guaranteed loans of up to $10 million to small businesses, which may be forgiven if the borrower retains employees and keeps its payroll.
To administer this program, the PPP relied on SBA-certified lenders to administer and distribute the funds after the affected business completed the application and certifications. While the application was streamlined, it did require that the business support its application with reports showing the average monthly payroll in the year before the application. For many small businesses, that required the assistance of CPA’s and consultants. It also required CPA, attorney and consultants to help in answering questions about other affiliated businesses where owners held over 20% ownership. Because of the limited pot of funds and the need for immediate funding, time was of the essence and many CPA, attorneys and consultants firms worked day and night to provide their clients this information so they could participate in the program.
The PPP was set up so that both the lending institutions and the CPA’s, attorneys and consultants who assisted in the application would be compensated for their efforts. However, that compensation was not to come from fees to the borrowers. The PPP program was structured so the lending would go straight to the businesses affected by the pandemic.
The compensation structure was based on receiving a small percentage of the compensation, that was set up to compensate both the lending institution and the CPA, attorneys and consultants who assisted the borrower in completing the application. This compensation was put directly into the CARES Act, which stated that lenders would receive five (5) percent for loans of not more than $350,000; three (3) percent for loans between $350,000 – $2,000,000; and one (1) percent for loans of at least $2,000,000.
From that compensation, lenders were required to compensate the agents who assisted borrowers in submitting and determining the amounts to be included in the application.
The CPA, attorneys and consultants that assisted the borrowers in submitting the application were to receive compensation from the lenders:
- 1% for loans not more than $350,000
- 0.50% for loans more than $350,000 and less than $2 million
- 0.25% for loans of at least $2 million
There was no requirement that the application identify an agent who assisted in the preparation and was entitled to compensation from the lender for assisting the borrower in submitting the application. In fact, there was not even a space to identify an agent.
Lenders are inventing a number of excuses to refuse to pay agent fees, or are only paying a partial percentage, of what’s owed to CPA’s, attorneys or consultants. This is improper and the lenders should be required to share the compensation as required under the PPP.
Which Banks or Credit Unions Have McCune Wright Arevalo Filed Against?
- JP Morgan Chase Bank
- Pacific Premier Bank
- Signature Bank
- Union Bank
- First Citizens Bank
- BMO Harris Bank
McCune Wright Arevalo Has a History of Successful Representation of Class Action Cases Against Banks and Credit Unions
The SBA guaranteed the loans for the lenders. It has been reported close to 5,000 lenders participating in the program. McCune Wright Arevalo, LLP, has experience assisting business clients and consumers in significant contingent class action litigation. We have successfully litigated class action cases against over 50 banks and credit unions in over 22 states. One of those cases by founder and managing partner Richard McCune was a $203 million verdict against Wells Fargo. In total, McCune Wright Arevalo has assisted banking customers recover over $1 billion in damages from banks and credit unions.
If you are a CPA, attorney or consultant who assisted a borrower in filling out an application and the lender hasn’t paid you agent fees, we are here and want to help. Speak with Richard McCune about your rights and the ability to pursue those rights as a class action on a contingency basis. Please call at (909) 345-8110 today so we can help you recover what you’re owed.