Skip to content
COVID-19

IN BRIEF: Payday lender drops COVID-19 loan program lawsuit after receiving loan

Nate Raymond  Reuters News

Nate Raymond  Reuters News

(Reuters) - A California payday lender has dropped a lawsuit challenging the Trump administration’s bar on lenders receiving forgivable emergency small business loans in response to the coronavirus pandemic after a bank approved its loan application.

Payday Money Centers on Monday voluntarily dismissed the lawsuit it filed in April in federal court in Washington, D.C., without prejudice, allowing it potentially to sue again if the government refuses to forgive the Paycheck Protection Program loan.
 
Christopher Hatfield, the company’s lawyer at Ballard Spahr, did not respond to a request for comment.
 
The $660 billion program, created through the CARES Act passed in March, allows struggling small and medium-sized businesses to obtain loans through banks that can be forgiven if they keep their employees on their payrolls.
 
Payday Money Centers, which operates 22 stores in California, challenged rules the U.S. Small Business Administration adopted barring PPP loans from going to, among other businesses, ones engaged primarily in lending.
 
A bank denied its initial application for a $644,382 loan as a result, the company alleged. But after the lawsuit was filed on April 25, a second bank, California Bank & Trust, approved its application on May 6.
 
The company said because the SBA had said it would not approve forgiveness of PPP loans made to lenders and was concerned it could be asked to return the money, an injunction was still needed.
 
But U.S. District Judge Amy Berman Jackson in an order on Friday questioned whether the case was now moot and whether the loan forgiveness issues were ripe.
 
The case is Payday Loan LLC v. United States Small Business Administration, et al, U.S. District Court for the District of Columbia, No. 1:20-cv-01084.
 
For Payday Money Centers: Christopher Hatfield, Constantinos Panagopoulos, Daniel Tobin, Jeremy Rosenblum and Sarah Reise of Ballard Spahr
 
For the SBA: James Gilligan of the U.S. Justice Department

To keep up-dated on the latest news and information regarding the COVID-19 pandemic, the economic impact, and the government’s response, at Thomson Reuters’ COVID-19 Resource Center, and you can follow Reuters.com or the Reuters App.