Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

Corporate gatekeepers and big tech monopolists are making it more difficult than ever for independent media to survive. Please chip in today.

Pedestrians look at the numerous small businesses that are closed in March 2020 in New York City. (Photo: Erin Lefevre/NurPhoto via Getty Images)

Big Banks Sued for Putting Large Corporations Ahead of Main Street Small Business Owners for Covid-19 Rescue Loans

"This is why oversight is important. No matter when or who it hurts, big business and corporations will always try to cash in."

Julia Conley

Small businesses filed class-action lawsuits against three large banks Monday, accusing them of manipulating the application process for a government program aimed at providing relief for smaller companies amid the coronavirus crisis.

According to the lawsuits, which were filed in California against Bank of America, Wells Fargo, and JPMorgan Chase, the financial institutions allowed large public corporations to skip to the front of the line for benefits offered through the $349 billion Paycheck Protection Program (PPP).

Court filings showed that a bank identified as "Lender 1"—thought to be JPMorgan Chase, according to the New York Times—gave out loans averaging over $515,000. The average sum is "well above the needs of the average small business," the plaintiffs said.

"Public companies that have access to other sources of money should not be using this. Small businesses need this pot to survive."
—Charles Elson, University of Delaware

A recent report from the Small Business Administration (SBA), which began administering the PPP last month as the coronavirus pandemic forced millions of businesses across the country to shut down, many loans for $150,000 or less—likely going to small businesses—were processed three days after larger loans. The lawsuits allege the banks held off on processing small businesses loans and gave precedence to larger companies, in violation of the "first come, first served" system under which the PPP was meant to operate. 

"With allegations that major banks shuffled Paycheck Protection Program applications to prioritize larger loan amounts and bigger businesses, Main Street businesses are furious," said small business advocacy group Main Street Alliance. "This possibility points to a clear design flaw in the program that tried to use the private lending market, already rife with discrimination and putting profits over all, as the mechanism for small business relief."

The lawsuits were filed as Congress was preparing to pass a new relief package including over $300 billion more for the PPP—an effort to replenish the fund several days after it ran out of money. The Senate passed the bill approving additional funds Tuesday afternoon.

Both the Associated Press and the Financial Times detailed the distribution of funds through the PPP in reports on Tuesday.

The AP found that companies with thousands of employees, many of which were risking financial failure long before the coronavirus pandemic spread across the U.S., were given loans through the PPP.

At least 75 companies that received loans were publicly traded, while eight companies received the maximum loan allowed of $10 million. More than 4,000 of the loans approved by the SBA were for at least $5 million. 

According to the Financial Times, Hallador Energy, a coal company based in Indiana, was one of the companies that received $10 million—weeks after it laid off 60 workers.

"Public companies that have access to other sources of money should not be using this," Charles Elson, a corporate governance expert at the University of Delaware, told the Financial Times. "Small businesses need this pot to survive."

Former Obama administration official Chris Lu tweeted that local businesses in his community have been unable to secure loans in recent days as large companies have monopolized the PPP's resources.

"This is why oversight is important. No matter when or who it hurts, big business and corporations will always try to cash in," tweeted J.D. Scholten, a Democratic congressional candidate in Iowa. 

As Congress passed the new relief package promising more funding for small business loans, the Main Street Alliance said the federal government must consider grants for struggling companies.

"Small businesses are demanding that any new funding must come directly to them via subsidies, not loans, and it must prioritize those who were left out," the group said.


Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.

We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.

Wall Street-Funded Democrat PAC to Spend $1 Million in Bid to Unseat Tlaib: Report

"Imagine spending $1 million to oust Rashida Tlaib instead of organizing in Detroit to make sure Michigan goes blue," quipped one progressive group.

Brett Wilkins ·


Parents Demand Fossil Fuel Non-Proliferation Treaty 'For the Sake of the Children'

"We cannot remain silent as the fossil fuel industry and world leaders rob our children of a livable future," parents from 32 nations wrote in an open letter.

Brett Wilkins ·


'We Can Do Better' Than Biden's Paltry Student Debt Relief Plan, Says AOC

The president's approach, said the New York Democrat, is "just enough to anger the people against it *and* the people who need forgiveness the most."

Julia Conley ·


Right-Wing Supreme Court Poised to Make US Gun Carnage Even Worse

The U.S. Supreme Court's right-wing majority could soon "obliterate even the mildest of gun regulations in service of its gun lobby masters."

Kenny Stancil ·


'Enough Is Enough!': Thousands Protest Outside NRA Convention in Texas

"I'm just tired of the NRA subordinating children's rights for gun rights," said one gun lobby opponent just three days after the school massacre in Uvalde.

Brett Wilkins ·

Common Dreams Logo