December 11, 2020

Paycheck Protection Program Discrimination Class Action Lawsuit

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Note: The class action lawsuit is now closed. The second round of PPP funding addressed the concerns that were a focus of the lawsuit. You can contact us with questions by clicking here or calling (410) 497-5947.

Frost Law filed a class-action lawsuit today alleging that the United States Small Business Administration (SBA) and Treasury Department unjustly discriminated against minority and woman-owned small business owners in regard to applying for and accessing much-needed relief via the $349 billion-dollar Paycheck Protection Program.

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The amended complaint has been filed in the US District Court and can be found here and our temporary restraining order can be found here.

Specifically, the complaint alleges that the SBA and and Treasury Department prioritized large businesses while discriminating against minority and woman-owned small businesses and self-employed individuals who were seeking relief.

The CARES Act created the Paycheck Protection Program to provide relief for COVID-19 impacted small businesses and self-employed individuals. As of April 16, 2020, the SBA is no longer processing these loans.

While the purported intent of the CARES Act was aimed to help small businesses, the smallest, most vulnerable group, including minority and women-owned business owners, weren’t even permitted to apply for relief from the Paycheck Protection Program until the end of last week.

Frost Law filed a Class Action Lawsuit in the United States District Court for the District of Maryland against the Small Business Administration and Treasury Department for discrimination against minority-owned and women-owned small businesses.

The Paycheck Protection Program, part of the $2 trillion government relief package, was written to be ‘first-come, first-served’ relief for small businesses suffering as a result of the global pandemic. But that’s not what happened.

Instead, the government published guidance that expressly prioritized the applications for larger businesses, knowing that it would disproportionately harm minority and women-owned businesses, and even gave these larger businesses credit for particular expenses that were specifically excluded in calculating loan amounts and loan forgiveness for the smallest businesses.

Moreover, the government gave these larger, more sophisticated businesses a one-week head start to apply for relief. Remarkably, banks were not even provided with the guidance needed for processing loans for self-employed individuals until April 14, 2020, just two days before the funds were depleted.

The funds are gone now, and the government’s discriminatory actions have resulted in a disproportionate number of minority and women-owned business owners unfairly left without relief.”


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