The building contractor group is suing the federal government over the rule to waive PPP loans

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A group representing US contractors has filed a lawsuit against two federal agencies demanding loan waivers from the Paycheck Protection Program are handled illegally.

The process of requiring borrowers to complete a questionnaire could unfairly preclude contractors from receiving forgiveness and potentially revoke the loan, according to a lawsuit filed in U.S. District Court on Dec. 8. The lawsuit was filed by the Associated General Contractors against the US Small Business Administration and the US Office of Management and Budget.

At the center of the dispute is a questionnaire that the SBA is required to fill out by borrowers over $ 2 million to determine whether they were eligible for the loans and for forgiveness under the lawsuit. According to the AGC, the nine-page “Loan Requirement Questionnaire” focuses only on borrowers’ current financial conditions and not on those that implemented the loan program in March and later supplemented with the Covid relief passed by Congress in April.

“This contradiction is deeply worrying for many borrowers because their success or failure through the remainder of 2020 could not have been apparent in the early days of the pandemic, when the economy was in a tailspin,” the lawsuit said.

The Paycheck Protection Program was designed to encourage small businesses to keep workers on their payroll during the historic economic downturn caused by the pandemic. Companies that received the two-year loans at 1 percent interest could be waived if the money was spent on eligible expenses such as employee salaries and health care.

Given the fast demand for the loans, the application was made simple, requiring only that the company be up and running by February 15, have employees to pay wage tax on, and certify that “the uncertainty of the current economic situation is the Loan application to support the day-to-day business of the authorized recipient. ” contractor were among the sectors that received the most credit.

In the months following the introduction of the program Fraud allegations surfaced and also that money went to big companies. The SBA began to crack down. To date, more than 80 people have been accused of defrauding the program The New York Times.

AGC says that at the time the program was launched, contractors and other companies were facing possible future conditions similar to – or even worse – the Great Recession. Some states had imposed lockdowns that did not consider construction a vital industry, which meant contractors could not work.

But when the lockdowns were lifted and many states deemed construction essential, the construction industry resumed its work. Some segments, such as residential, have experienced a boom. Road construction also accelerated in some areas as there were fewer drivers.

The lawsuit finds that while some sectors and areas have accelerated, others have not. “This does not mean that the construction industry has gotten anywhere near out of hand,” says the suit.

The lawsuit objects that the questionnaire seeks comparisons for the revenues of the second quarter of 2020 with the second quarter of 2019. She accuses the SBA and the OMB of having violated laws on public notification and review of the questionnaire and that the questionnaire was hidden from the public. The lawsuit states that SBA told OMB that it did not want to open the questionnaire for public scrutiny “because it feared that borrowers might change their business priorities to meet SBA’s expectations of them”.

It also states that borrowers will not be allowed to present the status of their business at the time of the loan was granted, as well as the business fears they faced, and denied due process. The questions are “arbitrary and capricious,” according to the lawsuit.

The lawsuit asks the court to prevent the SBA from sending the questionnaire and to base a decision on it. It also requires that the questionnaire be publicly scrutinized for at least 60 days and that “the entirety of the borrower’s circumstances” be taken into account.

A Equipment world The request for a statement from the SBA was not answered.

The AGC lawsuit is one of many filed against the SBA over the $ 523 billion program that expired in August. Most recently, a federal judge ordered the agency to release information on all recipients of loans under $ 150,000. The SBA had published data on loans for this amount, but refused to provide information on the smaller loans.

Lawsuits alleged that the loans went to large corporations and that the distribution of the money was public knowledge. The SBA refused to release the information on the smaller loans, claiming that it had breached the privacy of the borrowers. The SBA recently released the information following a federal court ruling.


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