A federal judge in Maryland extended a deadline for Bank of America to respond to a lawsuit over federal lending relief for small businesses.
Baltimore-based Profiles, a public relations firm, filed a class action lawsuit Friday against the bank, an authorized lender in the Paycheck Protection Program.
Small businesses represented in the lawsuit say they were unfairly locked out of the $349 billion program, which offers federally backed loans of up to $10 million to employers with fewer than 500 workers to help with payroll and other expenses during the new coronavirus crisis.
U.S. District Judge Stephanie A. Gallagher ordered the bank late Tuesday to respond to plaintiffs motion for a temporary restraining order by 5 p.m. Wednesday. The court then extended that deadline to 5 p.m. Thursday, said Alan M. Rifkin, managing partner of Rifkin Weiner Livingston, the plaintiffs’ attorney.
The restraining order requested by Profiles and other plaintiffs asked the court to order the bank to remove all “gating” requirements not found in the language authorizing the Payroll Protection Program, which is part of the $2 trillion coronavirus aid package passed by Congress. It also asked the judge to order the bank to immediately open its application process to qualified small businesses and to notify small businesses that were denied access they have a right to apply, Rifkin said.
The lawsuit accuses the bank of using a process that unlawfully prioritized its existing borrowing clients while barring the bank’s depository clients and other small businesses from applying.
After complaints began to surface Friday, Bank of America announced changes to its application process designed to broaden access. A bank spokesman said earlier this week that the lender had no comment on the lawsuit.
He said the bank broadened the group of clients who could apply as of Saturday morning and was focused on processing more than 180,000 applications.
In an amended lawsuit filed late Tuesday, lead co-plaintiffs, which now also include Diaspora Salon on North Charles Street and Elite Security Group of Pasadena, say the bank continues to violate the lending program.
Rifkin said a court hearing on oral arguments on the temporary restraining order has been set for 2 p.m. Friday.