Small businesses get left out of federal aid | COMMENTARY
By Amy Elias
For The Baltimore Sun|
Apr 20, 2020 | 12:03 PM
At a critical time of need, Bank of America turned its back on small businesses like mine, favoring its loan portfolio and balance sheet over the interests of Main Street during the coronavirus pandemic.
Although Congress authorized the Payroll Protection Plan (PPP) under the CARES Act in order to promptly get critical funds to small businesses so they can keep their lights on and their employees off the unemployment roll, Bank of America hid behind a legal nuance and prioritized its existing lending customers over all other small businesses in administering to the PPP program. In doing so, Bank of America appointed itself as the sole gatekeeper, deciding which small businesses could access these critical federal funds and which could not.
Even though the PPP is a federal relief act using treasury, not bank, funds, Bank of America denied access to those funds to countless thousands of small businesses like mine simply because we had some credit relationship elsewhere. And, while a judge of the U.S. District Court ruled that Bank of America did not have to allow all of its customers the right to apply for those critical funds because small businesses couldn’t enforce the PPP, the court of public opinion has weighed in otherwise.
As a loyal Bank of America customer since starting my company 30 years ago, I relied on their depository services — checking and savings — for my business accounts. For the more than 10 days leading up to the opening of Bank of America’s portal for PPP applications, I was repeatedly assured that my documents were in order and that my firm qualified for the loan program. Then, on April 3, when I submitted my application, I received an automated response that I did not qualify because I did not have a loan or a credit card with Bank of America. I couldn’t imagine that that was correct. But after several email exchanges with a representative of the bank, I was told that new restrictions had been applied that morning and that no exceptions would be made. They suggested I go elsewhere.
Since that time, I have heard from many small business owners throughout the country whose reactions range from surprise and anger to disappointment and despair. Some were previous customers of the bank. They wrote to me saying that they had left Bank of America long before COVID-19; others said that this was the final straw and the impetus they needed to find a banking resource that valued their business. Worse yet, because of Bank of America’s self-serving and callous treatment of small businesses under the PPP, many may not be able to find alternative lending institutions in the midst of a pandemic and may not make it through this economic disaster.
Unfortunately, Congress seemingly did not foresee the potential pitfalls of the CARES Act and likely did not expect how some lending institutions would prioritize their customers for the banks’ benefit. Nor did small business owners like me; we relied on our relationship with Bank of America and believed they would fairly and equitably administer the PPP program. I believed that when Congress envisioned the CARES Act, open access was not just implied but precisely the purpose. Once again, Wall Street, here in the form of Bank of America, has co-opted a program that Congress believed was intended to support all small businesses.
At the end of the day, small businesses make up a vast majority of all businesses in the country. And a great many are led by entrepreneurs who, by definition, are resilient and perseverant. I am counting on the fact that regardless of how many doors we have to push open and how many walls we need to climb, we will find a way to show Bank of America how wrong they were. They should be ashamed. But my guess is, they won’t care.