District Court Rejects Request to Enjoin Bank from Establishing Eligibility Criteria for Paycheck Protection Program Applications Beyond Those Set Forth in the CARES Act: Court Holds that There is No Private Right of Action Under the CARES Act, and that the Act Allows Lenders to Establish Additional Eligibility Criteria for Paycheck Protection Program Loans

Sullivan & Cromwell LLP - April 13, 2020

In a decision issued today, Judge Stephanie Gallagher of the U.S. District Court for the District of Maryland denied a motion for a temporary restraining order and preliminary injunction that would have prohibited Bank of America from applying eligibility criteria for Paycheck Protection Program (“PPP”) loan applications beyond those stated in the CARES Act. The court held that the CARES Act, like the Small Business Act (“SBA”), does not include an express or implied private right of action that would allow private plaintiffs to sue banks for violating the Act’s provisions. The court also held that lenders may, consistent with the CARES Act, establish eligibility criteria for PPP applications that are not expressly listed in the Act. Though only the first decision to address this issue, the decision provides support for banks participating in the PPP program that choose to establish or prioritize categories of small business applications.