Frost Law, an Annapolis based law office has filed a class action lawsuit against the Small Business Association relating the administration of the Paycheck Protection Program (PPP) loan component of the federally funder CARES Act.
The suit alleges that the SBA discriminated against minority-owned small business owners by disbursing loans and funds to larger companies before even allowing smaller, self-employed businesses to apply. Self-employed business owners were unable to apply for the loans until the end of last week (April 10, 2020), and the funds had been exhausted by April 16, 2020.
You can read the lawsuit below: (If it does not display, please click here for a PDF)
In a statement released by Glen Frost, Managing Partner:
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-owned and female-owned business owners unfairly left without relief.
