CreditNinja has expressed dissatisfaction with the Small Business Association’s decision to reject its application for loan forgiveness, despite having received a $1 million PPP loan in April 2020.
The online provider of short-term loans has taken legal action, filing a complaint on September 15 in the US District Court in Illinois’ Southern Division. According to the document, initially reported by Seamus Hughes’s CourtWatch newsletter, CreditNinja alleges that the COVID relief program wrongfully denied their loan forgiveness application.
CreditNinja has recently come under scrutiny for offering short-term, high-interest loans with rates reaching as high as 447% in Texas. They took advantage of a loophole by registering as a “credit access business” or a broker, as revealed in an investigation by KHOU-11.
In its denial, the SBA cited CreditNinja’s status as a lending company, a category that has been historically ineligible for loans from the Small Business Association under the organization’s 1996 rules.
CreditNinja contests this decision in its complaint, arguing that these rules were never referenced in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the stimulus package designed to aid businesses during the pandemic. The complaint asserts, “Nothing in the language of the CARES Act, or any other governing statute or regulation, provides any right, ability, or discretion for the SBA to impose twenty-five-year-old limitations on a brand-new, expansive loan program created in response to a public health and economic crisis.”
CreditNinja has not yet responded to Insider’s request for comment.
Furthermore, the company raises concerns about the SBA granting loan forgiveness to similar business types and industries, such as adult entertainment and gambling, which also fall outside the group’s rules.
The SBA has not responded to Insider’s request for comment.
Throughout the pandemic, various businesses and individuals, including those already affluent, secured substantial PPP loans. Notably, Kanye West’s fashion company Yeezy obtained over $2 million in PPP loans, according to Forbes. Renowned artist Jeff Koons, who is also financially well-off, received a $1.1 million PPP loan in April 2020, as reported by ProPublica.
The US Treasury has not yet responded to Insider’s request for comment.