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JPMorgan Chase Bank and two of its largest clients, Ruth's Chris and Phunware Inc., face allegations in a new class action that they profited off the $349 billion loan program for COVID-19 relief by shutting out small businesses.

The lawsuit, filed Friday by Chicago plaintiffs attorney Jay Edelson, names all three companies and comes one day after Ruth's Chris announced that it would return $20 million received through the Paycheck Protection Program, part of the $2 trillion COVID-19 stimulus package passed last month.

"As the federal government was ramping up to allow small businesses to apply for PPP loans, Chase decided to ensure that its favored clients would be provided special assistance to make sure their loan applications were submitted quickly, accurately, and without a hitch," said the complaint, filed by Sha-Poppin Gourmet Popcorn, a gourmet popcorn distributor. "Everyone else, meanwhile, would have to try to submit an application through a non-functional web portal—or look elsewhere."

Sha-Poppin said it ended up getting a $6,000 loan from a smaller bank after struggling to apply for a $19,000 one from Chase.

A Ruth's Chris representative declined to comment about the lawsuit. On Thursday, Ruth's Chris, based in Winter Park, Florida, agreed to return $20 million it received through the program. Other companies, like Shake Shack, made similar moves following a growing backlash from small businesses.

"We were eligible for this assistance, and our goal was to utilize funds to keep as many of our team members working for as long as possible, cover 100% of healthcare benefits, and position Ruth's Chris to rebuild its workforce as quickly as possible," wrote Cheryl Henry, CEO of parent company Ruth's Hospitality Group, in an emailed statement. "We intended to repay this loan in adherence with government guidelines. As we learned more about the funding limitations of the program and the unintended impact, we have decided to accelerate that repayment. We remain dedicated to protecting our hardworking team. It is our hope that these funds are loaned to another company to protect their employees, just as we intended."

Representatives from JPMorgan and Austin, Texas-based Phunware, a mobile application development platform that, according to the lawsuit, received $3 million from President Donald Trump's reelection campaign in 2019, did not respond to requests for comment.

The suit by Edelson, of Edelson PC, is the latest to target the Paycheck Protection Program, part of the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. The program, designed to fund more than two months of payroll expenses to small businesses, ran out of money April 16, less than two weeks after it launched, according to the Small Business Administration. Congress anticipates adding another $310 billion to the fund, but critics contend that banks and public companies have taken advantage of the program by edging out small-business applicants.

Class actions filed Sunday alleged that JPMorgan Chase, Wells Fargo & Co., Bank of America and U.S. Bank prioritized larger loan applicants in order to generate $6 billion in origination fees. The suits cited SBA statistics revealing that, through April 13, 15% of the loans processed were for those seeking the smallest loan amounts of less than $150,000. However, in the final days of the program, through April 16, those loans amounted to more than 17%, showing the banks reshuffled the application process to leave small businesses the last to receive funding.

Friday's suit cites similar statistics. It also notes that Phunware, which appointed former JPMorgan Chase executive Blythe Masters to the head of its board after Congress passed the Paycheck Protection Program, got the "white glove treatment" from Chase, which approved its $3 million loan within days.

The lawsuit noted that Ruth's Chris returned $20 million, but, it says, "the damage was done."

"Hundreds of small businesses like and including plaintiff missed an opportunity to receive their maximum potential PPP loans in a timely manner due to Ruth's Chris's (and Chase's) actions, and there is no guarantee they ever will," the suit says. "Ruth's Chris's walk-back cannot undo the lost opportunities, lost time value of money, and unnecessary stress incurred by these small businesses and their owners."

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