09/13/2022

PPP Borrowers Question Bank of America Charges

The institution is taking 'finance charges,' calling them 'accrued interest'

Bank of America has refused to forgive some of the loans it made to small business owners through the Paycheck Protection Program. An early COVID-era program that gave business owners money to cover payroll and other costs to help keep them afloat during the pandemic, the loans were supposed to be forgiven if used correctly. But Bank of America forced borrowers to use its own opaque portal, rather than the Small Business Administration's (SBA), giving business owners limited recourse to appeal when their applications for forgiveness were rejected.

Now those business owners are faced with paying back loans they thought would be converted to grants, and they've been hit with another surprise: The bank is taking huge portions of their payments in the name of "finance charges." Bank of America told The Intercept the charges are for interest that began accruing when the loans were dispersed; unforgiven PPP loans, according to the SBA's rules, should accrue 1 percent annual interest.

But business owners say the bank failed to explain the charges on statements or elsewhere, and they have not been given information on how much interest they need to pay or the schedule for doing so — leaving borrowers confused, demoralized and in the dark. One business owner's statement showed over $700 from a $2,000 payment taken by Bank of America for a line demarcated only as "finance charge," while another listed a finance charge higher than the amount of the payment that was put toward the loan principal: On a $569.79 payment, $423.13 was taken as a finance charge.

Please select this link to read the complete article from The Intercept.