Bank of America has refused to forgive some of the loans it made to small business owners through the Paycheck Protection Program. An early Covid-era program that gave business owners money to cover payroll and other costs to help keep them afloat during the pandemic, the loans were supposed to be forgiven if used correctly. But Bank of America forced borrowers to use its own opaque portal, rather than the Small Business Administration’s, giving business owners limited recourse to appeal when their applications for forgiveness were rejected.

Now those business owners are faced with paying back loans they thought would be converted to grants, and they’ve been hit with another surprise: The bank is taking huge portions of their payments in the name of “finance charges.” Bank of America told The Intercept the charges are for interest that began accruing when the loans were dispersed; unforgiven PPP loans, according to the SBA’s rules, should accrue 1 percent annual interest.

But business owners say the bank didn’t explain the charges on statements or elsewhere, and they haven’t been given information on how much interest they need to pay or the schedule for doing so — leaving borrowers confused, demoralized, and in the dark. One business owner’s statement showed over $700 from a $2,000 payment taken by Bank of America for a line demarcated only as “finance charge,” while another listed a finance charge higher than the amount of the payment that was put toward the loan principal: On a $569.79 payment, $423.13 was taken as a finance charge.

The charges also aren’t acting like typical interest payments. According to several bank statements that six small business owners shared with The Intercept, the finance charges vary widely from month to month, even for the same borrower: One business owner was charged $233.27 on a November statement and $10.36 the next month. On another statement, the entire $238.47 payment went to a finance charge and nothing went to the principal, while the previous and following month’s statements only put some of the payment to the finance charge. Another borrower’s charges keep increasing each month, rather than shrinking as would be expected if she were paying off the interest.

Bank of America spokesperson Bill Halldin said that the 1 percent interest began accruing as soon as borrowers received their funds, and for those whose loans haven’t been forgiven and are making payments, “their initial payments were applied to accrued interest first and then principal,” he said. “The finance charge is the amount of their payment that was applied to accrued interest.”

The SBA confirmed this. “If the borrower did not receive full forgiveness due to an excess loan amount, then the borrower must repay the remaining balance with the 1% accrued interest,” said Christalyn Solomon, a spokesperson for the agency in a statement. “The bank is correct that interest began to accrue as of the date of disbursement.  SBA generally requires that 7(a) loan payments be applied first to accrued interest and then to principal.”

Halldin did not explain why the charges are not listed as interest payments, why they are taken as lump sums rather than added to the amount owed, or why they are widely variable month by month.

Because the bank has listed the sums as finance charges on statements, not interest payments, business owners have been assuming that Bank of America is taking extra fees, adding to their confusion and anger over the entire process. “How is Bank of America allowed to make a 3 percent fee off of this and now they’re charging these ridiculous finance charges?” said Amy Yassinger, owner of events entertainment company Yazz Jazz in Illinois, who has a PPP loan with Bank of America that the bank has refused to forgive despite her assertion that the bank itself helped her apply for the loan and that she used the money solely to pay employees when her work dried up.

The SBA has made it clear that banks are not allowed to “charge small businesses any fees,” especially since banks that issued PPP loans were already compensated for doing so. Together, PPP issuers stood to make $18 billion in processing fees from the government; in mid-2020, Bank of America in particular was forecast to make $755 million, or 2 percent of its pre-pandemic revenue, based on the assumption that it would reap an average 3 percent fee from each loan from the government.

Mark Cobb, owner of Premier Pressure Washing & Concrete Cleaning in Georgia, only applied for a PPP loan because he was assured so many times — by not just the government, but Bank of America itself — that it would be forgiven. But now that Bank of America has refused to forgive his $20,362 loan, he’s had to start making payments. His was the statement in which Bank of America took $423.13 as a finance charge from a recent $569.79 payment, leaving just $146.66 to go toward the principal.

“This is crazy,” he said. “If I’m going to pay the damn loan off, I want every bit of it to go to principal.”

But he knows that he has to keep making payments, even if so much of it isn’t even going toward paying off the loan. “I can’t afford to get my credit ruined,” he said. “They’ve got you. If you don’t pay it, they’ll come get everything.”

Cobb’s business has been pressure washing the outside of restaurants for 22 years. When the pandemic hit, the work “overnight stopped,” he said. So when Bank of America, where he’s banked since 1978, started sending him notifications urging him to apply for small business loans, he decided to apply for a PPP loan to be able to keep paying the people who do the work for him, whom he hires as 1099 contractors. “That’s what I did with the money — I paid them,” he said. Within eight weeks, the money was spent.

Cobb said that when he applied for a PPP loan, contract workers were still covered by the terms of the program — it was only a week after he received the money, he said, that the rules changed to exclude payments to 1099 workers. But his forgiveness application was denied because he had used the money to pay 1099 employees.

“They’ve got you. If you don’t pay it, they’ll come get everything.”

“It doesn’t sound like a lot to a lot of people, but it is to me,” he said. “I would never have taken a $20,000 loan … unless I was assured multiple times it was going to be forgiven.”

Cobb’s business has rebounded since the start of the pandemic, but it’s still depressed compared with before the crisis. “I’m not making technically any more at all; I’m just paying subcontractors right now,” he said. If he doesn’t, he knows that in the tight labor market they’ll leave him and go work somewhere else.

So the money taken from his payments as finance charges is coming right out of his empty pockets. “Six hundred dollars a month could go toward paying a car off, for paying my mortgage down,” he said. “It makes everything a lot tighter.” It also depresses his business: If he weren’t making PPP payments, he would have enough money to buy another rig and put another person to work, taking on more clients. “I turn down business all the time because I don’t have the money,” he said.

He’d love to just sell his business and retire, but knows he can’t with the loan hanging over him. “If I could declare bankruptcy and it wouldn’t ruin my credit, I’d have done it already,” he said.

Cobb got no explanation about the finance charges ahead of time, so he contacted the bank about them. “I’ve called so many times. It drives me crazy,” he said. One person told him that the charges were for accrued interest, but he claims that the math doesn’t add up, and “none of them could really explain it.”

Yassinger, the Yazz Jazz owner, is still fighting to get her loan forgiven, but in January she made her first payment, and she’s regularly made payments since. A finance charge has been taken out of every single one, including $769.78 from a $2,000 payment.

“None of us want millions of dollars. We just want to get this fixed.”

She says she didn’t actually get a statement showing her payment and the finance charges until May. “I started freaking out,” she said. Her monthly payment was $885.86, but she decided to pay $2,000 a month in the hopes of paying it down faster. “I was thinking that in 18 months it’ll be pretty much paid off,” she said. When she saw that instead so much was going toward finance charges, “it was just crushing,” she said. “I’m suffocating with this debt.” She received no explanation for why and when such charges would be taken out.

Yassinger is part of a group of small business owners who got their PPP loans through Bank of America and haven’t had them forgiven. The solution they’re pressing for, in any meeting they can get with members of Congress, is legislation saying that small business owners who were overfunded but used their loans properly should have them forgiven and converted into grants. “None of us want millions of dollars. We just want to get this fixed,” she said. “We just want these forgiven.”

In the meantime, she has to keep paying, just like Cobb, or risk impacting her credit. “I’m trying to do what I think is right,” she said. “But at the same time, I don’t want to give them any more money right now, because what’s the point?”