Judge rules Bank of America can continue COVID-19 small business loan restrictions

Bank of America to add 600 new Maryland jobs
Posted at 2:39 PM, Apr 13, 2020
and last updated 2020-04-13 14:52:58-04

BALTIMORE — A Federal Judge in Maryland has declined to issue a temporary restraining order and injunction against Bank of America in a class action lawsuit filed on behalf of two Baltimore business owners.

In her ruling, U.S. District Court Judge Stephanie Gallagher said the plaintiffs didn't have a private right of action under the newly passed CARES Act, concluding the issue should be settled by congress.

“Congress is better positioned to remedy any defects in the CARES Act, and to pass supplemental legislation best aimed at ameliorating the effects of the COVID-19 crisis,” Gallagher wrote.

The lawsuit accused Bank of America of unlawfully placing restrictions on relief money approved by congress intended for small business owners impacted by the coronavirus.

RELATED: Small business owners sue Bank of America, claim its denying them access to coronavirus relief money

Lawyers for the businesses claim Bank of America is prioritizing their existing borrowing clients over their depository clients, which they say is disqualifying some small business owners from applying for funds through the government loan program.

The Paycheck Protection Program (PPP), which is part of the $2.2 trillion stimulus package called the CARES Act, made $349 billion available to help small business owners stay afloat during the pandemic.

The federally backed loans would cover eight weeks of payroll and other expenses for small business owners with less than 500 employees.

In response to the Court's decision, the plaintiffs attorney, Alan M Rifkin, of Rifkin Weiner Livingston LLC., said the decision would be appealed.

"The class action highlights serious shortcomings in Bank of America’s administering of the program, which, by application, denied scores of small businesses throughout the country the right to access these critical funds at a time when those funds are desperately needed. While the Court denied the relief Plaintiffs sought, concluding among other things that the PPP did not allow for a private right of action, Plaintiffs will appeal the Court’s decision and continue to press their right to seek these critical funds. During the pendency of the appeal, we call upon Congress, Bank of America and all other banks throughout America to do what is right and open the PPP process to any small business that otherwise qualifies for Federal funds under the PPP program."