Bank of Americathe second-largest Paycheck Protection Program lender is refusing to forgive some small business owners’ loans and preventing them from getting relief directly from the Small Business Administration, which oversees the PPP program.
One of the first forms of assistance Congress offered to businesses during the Covid-19 pandemic was PPP loans, which were supposed to be completely forgiven if used to cover payroll and other specified expenses. . But in more than half a dozen interviews and emails with The Intercept, small business owners who got their PPP loans through Bank of America described the same experience: a year or more after receiving their first loans, they were told that the bank had determined that they had initially received too much money and that it would only return part of it, leaving them to repay the rest with interest. Jose Ramos, owner of Kin-Keepers in Virginia, was told none of his $67,500 PPP loan would be forgiven.
Not all business owners have been able to determine why they are being denied full forgiveness; some say it has to do with whether the money could be used to pay contractors, and others say it has to do with whether they should have included health insurance costs in their claims . But all maintain that they followed the rules as they were written at the time they signed the promissory notes on their loans and should not be held responsible for the many rule changes the SBA made afterwards. . Bank of America, they point out, reviewed their applications and approved them for the initial loans.
When business owners went to apply for a rebate, Bank of America’s online portal was pre-populated with the lowest rebate amount and did not allow them to edit it or upload documents they were filling out. in fact, for the entire original. ready. In a screenshot shared with The Intercept, when a small business owner tried to change the figure in a box titled “Loan Forgiveness Requested Amount” from the bank’s figure to his full PPP loan, a message error appeared and she was unable to proceed to the next screen. And calls to the bank were unsuccessful. Christopher Martin, owner of CT Martin Inc., kept meticulous receipts as proof that he used his $10,885 PPP loan for the purposes specified. “All the receipts, all the records they told you to keep meant nothing to them,” he said.
In a statement, Bank of America said, “In the forgiveness process, we are required to follow the rules and guidelines of the Small Business Administration,” specifically pointing out discrepancies regarding payments to contractors. “This idea that people just can’t send us documents just isn’t true,” spokesman William Halldin said. The SBA declined to comment on the story.
Fearing an impact on their credit scores or defaulting on their unforgiven loans, some small business owners submitted Bank of America’s request for forgiveness for the lower amount when they thought they should be forgiven for the full amount. of the loan. Others refuse to seek forgiveness for an amount they feel is less than they deserve.
Heather Sheppard declined to file her forgiveness request with Bank of America because she won’t let her change the forgiveness amount or upload documents. She received a PPP loan of $16,933, which helped her Illinois-based dance and fitness studio, Allegro Performing Arts, through tough months in early 2020. But the bank said the maximum pardon amount she can receive is $6,900. “If I knock [submit], then that makes me responsible for the rest of the money,” she said. “According to the parameters of the law, I should be pardoned for the full amount.”
“What they’re hoping for is that we get tired, depressed, move on.”
Sheppard says she called the bank about 80 times between May and July 2021. At first, she would reach real people, who would send her to different teams and promise to escalate her issue. But she got no answers. “In August, I was so frustrated that I stopped calling,” she said. She periodically logged into the bank’s forgiveness portal to see if the number had changed, but it never did. “I just got really depressed,” she said. “This whole experience has been extremely stressful.”
Sheppard took a second job working night shifts at an Amazon warehouse to try to keep his business afloat, but it cost him physically. If her PPP loan was canceled entirely, she said, she could finally quit the job at Amazon. “What they’re hoping for is that we get tired, depressed, move on,” she said.
After numerous complaints about the slow and confusing forgiveness process across all lenders, in August the SBA set up its own portal through which small business owners can apply directly with the agency. But banks have had to register with the SBA portal, and Bank of America is among those that have refused to do so. This means that businesses that have obtained their PPP loans through the bank have no choice but to go through the bank’s portal. In a statement, Bank of America said, “If we used the SBA site … we would still be required to review each forgiveness request and provide the recommended forgiveness amount, just as we do on our own site.”
Fearing the impact on her credit rating, Illinois music company owner Amy Yassinger asked for forgiveness through Bank of America’s portal, even though the bank said it would only forgive 2,436 $ from his PPP loan of $38,730. “I submitted this pardon request under duress,” she said. She is now paying it back in monthly installments of $2,000. She hired an attorney at one point, who sent the bank a letter alleging that she had violated the False Claims Act by submitting the original documents for the SBA loan, but the bank rejected it and the lawyer warned Yassiner only to go further. could cost the same as its original PPP loan.
“You feel trapped, you feel smothered, because the bank is so powerful,” she said.
The experience was so difficult that Yassiner created a support group of Bank of America customers who had gone through the same experience. The group currently has 29 members, including Yassinger, Sheppard and Ramos. All business owner loans are under $100,000. “Honestly, having this band has been therapy for all of us,” Yassinger said.
“You feel trapped, you feel suffocated, because the bank is so powerful.”
Members of Yassinger’s group attempted to file complaints with federal regulators — including the Office of the Comptroller of the Currency, the Federal Trade Commission and the Consumer Financial Protection Bureau — but they were closed with no action against the bank. So they are focusing on a legislative solution to their problem. Congress had debated automatically canceling PPP loans under $150,000 at the end of 2020, but lawmakers never acted.
In the meantime, PPP borrowers are permitted to appeal forgiveness decisions through the SBA, but this process cannot begin until a borrower submits a forgiveness request to their bank. In the case of these business owners, this requires accepting Bank of America’s forgiveness number. “Anyone is free to use the SBA,” Bank of America’s Halldin said.
When Martin contacted the SBA to ask to appeal Bank of America’s decision that he could only get $3,114.79 forgiven on his $10,885 PPP loan, he was told the agency would not could not process a request until the bank itself appealed. “But Bank of America won’t talk to me,” he said.
Martin’s business is still suffering from the pandemic; he is an independent information technology professional and he estimates that nearly 60% of his clients have gone out of business. He didn’t have the money to start paying what the bank said he owed. But because Martin lives in an economically depressed area, late last year he was able to apply for a grant through the Economic Disaster Loan Program, also run by the SBA. As soon as he received the money, he turned around and used it to pay the balance.
“The EIDL loan should have belonged to me, to run my business,” Martin said. It would have covered travel expenses to meet new clients and book new business. “But instead it saved me from being sued by Bank of America.”
“I was the small entrepreneur this was designed to help,” Martin said. “And Bank of America just decided not to keep its promise.”