Regions Bank, headquartered in Birmingham, Alabama, has agreed to pay the United States $4,919,631 to resolve allegations that Regions received payments it should not have received from the U.S. in connection with Regions approving forgiveness of a customer’s Paycheck Protection Programme loan, despite the fact that the PPP loan was not eligible for forgiveness.
The United States alleged that, on or about August 3, 2021, Regions Bank approved forgiveness of a PPP loan obtained by an individual through Regions Bank, but the PPP loan was not eligible for forgiveness.
The United States further alleged that Regions Bank was unjustly enriched by the SBA payment upon forgiveness of the PPP loan.
Congress created the PPP in March 2020 as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide federally guaranteed loans to small businesses suffering economic hardship due to the COVID-19 pandemic.
The U.S. Small Business Administration administered the PPP. The CARES Act authorised private lenders to approve PPP loans for eligible borrowers who could later seek loan forgiveness, so long as they used loan funds for employee payroll and other eligible expenses.
Upon forgiveness of a PPP loan, the SBA paid the lender the forgiven principal loan balance and any accrued interest. SBA also paid to lenders who originated PPP loans a fee calculated as a percentage of the loan amount.