Bank of America Defends Giving Priority to Customers in Rescue-Loan Program
- Applicants who aren’t customers seek to halt favoritism
- Paycheck Protection Program offers loans to rehire workers
Photographer: Daniel Tepper/Bloomberg
Bank of America Corp. said a new law authorizing a coronavirus rescue-loan program doesn’t bar it from favoring its own customers in processing applications and disgruntled consumers have no right to challenge it.
The bank, which came under fire for prioritizing applications from existing small-business customers, asked a federal judge in Baltimore Thursday to reject a request in a lawsuit to temporarily bar it from employing the practice as millions seek to withstand the economic ravages wreaked by the virus.
Bank of America’s decision to put existing customers at the head of the line is simply “an effort to direct its resources quickly and efficiently,” the bank’s lawyers said in a court filing.
The initiative, called the Paycheck Protection Program, is aimed at helping small businesses keep workers on payrolls by offering forgivable loans of as much as $10 million to cover payroll costs, mortgage interest, rent and utility payments if firms retain employees. Requests for unemployment benefits have surged in the wake of the virus to about 16.8 million during the economic shutdown.