WASHINGTON — Regions Bank has agreed to pay the federal government nearly $4.9 million to settle allegations that it improperly approved forgiveness of a Paycheck Protection Program loan that was not eligible under program rules, the Justice Department announced.
The Birmingham, Alabama-based bank will pay $4,919,631 to resolve claims that it received payments from the U.S. Small Business Administration it should not have collected after approving forgiveness of a customer’s PPP loan on or about Aug. 3, 2021. The United States alleged that Regions was unjustly enriched by the SBA payment made upon that forgiveness.
“The PPP was intended to provide critical assistance to eligible businesses during the economic uncertainty caused by the Covid-19 pandemic,” said 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.”
Congress created the PPP in March 2020 under the Coronavirus Aid, Relief and Economic Security Act to provide federally guaranteed loans to small businesses facing hardship during the pandemic. The SBA administered the program, which authorized private lenders to approve loans for eligible borrowers and later seek forgiveness provided loan funds were used for payroll and other qualifying expenses. Upon forgiveness, the SBA reimbursed lenders for the forgiven principal and accrued interest, and also paid origination fees calculated as a percentage of the loan amount.
The settlement was the product of a coordinated effort involving the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of Missouri, the SBA’s offices of General Counsel and Inspector General, and the Federal Deposit Insurance Corporation’s Office of Inspector General.
The claim resolved by the settlement reflects allegations only. There has been no determination of liability.
By: Big Sky Broadcasting Newswire