Friday, November 27, 2020

Agent fees for CPAs, lawyers?

We have been hearing from some of our colleagues in other states about a few issues that seem to have popped up that relate to the COVID-19 virus outbreak and the related Paycheck Protection Program initiative.

We wanted to check with our banks as to whether these or any other issues may have come to your attention or may be going on in your area of providing bank services.

The first involves the general question of fees and whether your bank has experienced any “demands” for payment of “finder’s fee” out of your bank’s payment amount for originating the loan.

• We know a number of institutions in Oklahoma have included explicit language in their loan documents that state clearly the bank will not pay any agent fees alleged to have been incurred before the PPP loan was funded unless the bank has agreed to do so in advance.

• The American Institute of CPAs has recommended that any of its members who have assisted or advised clients about the PPP loan application process to “contact the lender prior to offering assistance and performing advisory work” for the client (emphasis added).

• Furthermore, “if the lender agrees to compensate the CPA firm” for any work done before the loan has been made, that agreement should be documented and disclosed to the proposed borrower (small business owner).

• The American Bar Association (the “other” ABA) has not published such guidance and, as a result, we’re hearing about more and more lawsuits being filed to challenge a bank’s refusal to pay such lawyers a fee out of the money a lender receives for its work in putting the loan together in the first place.

• As a matter of practicality, a number of smaller banks have gone ahead and paid the fee simply to avoid the costs of defending against such a claim.

• Such settlements, however, do not eliminate the possibility other similar claims might be forthcoming.

• If a class action is brought against the bank, then risk of an increasing settlement cost also increases.

The other issue we’re hearing about plaguing some other states is a coin shortage – another casualty of the COVID-19 virus. As was the case with toilet paper, there is some hoarding of coins taking place, and it’s having an impact on banks’ collective ability to serve some of its commercial customers.

What we’re asking our members is to please let us know if either of these issues have surfaced and, if so, the extent to which they have impacted bank operations. Please feel free to respond to Jeremy Cowen, Megan McGuire, Adrian Beverage or Roger Beverage.