An Alabama-headquartered bank with $157.4 billion in consolidated assets has agreed to settle allegations stemming from its forgiveness of a pandemic-era business loan.
The US Department of Justice says that on or about August 3rd, 2021, Regions Bank approved the forgiveness of a customer’s Paycheck Protection Program (PPP) loan.
Congress created the PPP in March 2020 to provide federally guaranteed loans to small businesses facing economic uncertainties because of the COVID-19 pandemic.
Eligible borrowers could later seek forgiveness of their loan provided that they used the funds on employee payroll and other eligible expenses. The US Small Business Administration (SBA) would then pay the lender the forgiven principal loan balance and the interests.
Regions Bank is accused of unjust enrichment for receiving payment from SBA after allegedly forgiving a PPP loan that was not eligible for forgiveness.
Says Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division,
“The department is committed to ensuring that PPP lenders are held accountable for failing to comply with applicable program requirements, including approving forgiveness of PPP loans that were not eligible under program rules.”
Regions Bank agreed to pay the US $4,919,631 to resolve the allegations. The settlement agreement says that the bank’s decision does not equate to its admission of liability.
The bank has also released a statement on the settlement.
“While we disagree with claims made in this matter, we have settled with the goal of closing this chapter and moving on. Regions facilitated over 75,000 Paycheck Protection Program loans, helping small businesses stay open while keeping hard-working Americans employed during the worst of the pandemic. We are proud of our record supporting small businesses and have resolved this one individual matter regarding one specific loan from that 75,000 total.”
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