Signature Bank: Failed Bank With 9,614 PPP Loans

Type: Bank (failed); PPP lender and Main Street Lending Program lender.
Legal entity: Signature Bank, New York, New York (FDIC Cert. 57053), opened in 2001 and closed on March 12, 2023. Not the unrelated Signature Bank of Rosemont, Illinois, or Signature Bank, N.A. of Toledo, Ohio.
Pandemic-relief role: PPP lender in both rounds; lender on five Main Street loans whose participations the Federal Reserve Bank of Boston bought; defendant in the 2020 PPP agent-fee suits and in a 2021 False Claims Act qui tam complaint.

In the archive

Lender page → Signature Bank
Case: In re Paycheck Protection Program (PPP) Agent Fees Litigation — MDL No. 2950

Signature Bank made 9,614 PPP loans for $3.09 billion, 8,330 of them to New York borrowers, according to SBA's loan-level data.¹ It also made five loans under the Federal Reserve's Main Street Lending Program, for $113.4 million. When the New York State Department of Financial Services closed the bank on March 12, 2023, the Special Inspector General for Pandemic Recovery warned Treasury that it was "not clear" how the failure would affect those borrowers or Treasury's investment in the program.²³

PPP

SBA's file lists Signature's loans under its New York lender location: 5,590 loans for $2.0 billion in 2020, then 535 first-draw loans ($121.6 million) and 3,489 second-draw loans ($970.5 million) in 2021.¹ Its average loan was about $321,500. The file names Flagstar Bank as servicer on 263 of the loans.¹ Our lender page shows 10,737 loans under the name because it also counts 1,123 loans ($371.3 million) that SBA files under a Signature Bank in Rosemont, Illinois, a different bank.¹

Main Street

The Federal Reserve's loan-level Main Street disclosure lists five loans by Signature Bank of New York, for $113.4 million.³ Under the program, a Boston Fed special-purpose vehicle bought 95 percent of each loan and the lending bank kept 5 percent. In its April 11, 2023 alert, SIGPR wrote that Signature's closure, "as well as any potential future bank closures, may put Treasury's investment in the MSLP at risk," and recommended that Treasury work with the Boston Fed to protect it. Treasury agreed.²

In court

Signature Bank and Signature Financial LLC were among the more than a hundred lenders sued in 2020 by agents who said lenders owed them "agent fees" for helping small businesses apply. With most defendants, they opposed consolidating the cases, and on August 5, 2020 the Judicial Panel on Multidistrict Litigation declined to centralize them.⁴ The suits' later history is in The Agents Got Nothing.

A False Claims Act complaint filed under seal in the Southern District of New York on July 30, 2021 named Signature as a defendant alongside Jay Suites, a Manhattan short-term office-rental business, and its owners. The relator alleged that the Jay Suites companies obtained sixteen PPP loans totaling $1,386,378 on false applications. He alleged that Signature, which he said held their payroll accounts, "knew or reasonably should have known" the applications were false and passed them to SBA "motivated by a desire to obtain processing fees."⁵ These are a relator's allegations. We have no later filing from the case.

Before and after

Before the pandemic, Signature lent to fintech lenders too: in February 2020 Lendio announced a $24 million debt facility from Signature Bank as part of a $55 million round.⁶ FDIC records list the bank as opened on April 12, 2001 and ended on March 12, 2023.⁷

Lendio: fintech loan marketplace with a Signature Bank debt facility.
Eric S. Rosengren: president of the Boston Fed, which ran Main Street.

Signature Bank

In the archive

PPP

Main Street

In court

Before and after

Related profiles

Sources