Small businesses filed class-action lawsuits against three large banks Monday, accusing them of manipulating the application process for a government program aimed at providing relief for smaller companies amid the coronavirus crisis.

According to the lawsuits, which were filed in California against Bank of America, Wells Fargo, and JPMorgan Chase, the financial institutions allowed large public corporations to skip to the front of the line for benefits offered through the $349 billion Paycheck Protection Program (PPP).

Court filings showed that a bank identified as "Lender 1"—thought to be JPMorgan Chase, according to the New York Times—gave out loans averaging over $515,000. The average sum is "well above the needs of the average small business," the plaintiffs said.

"Public companies that have access to other sources of money should not be using this. Small businesses need this pot to survive."

—Charles Elson, University of Delaware

A recent report from the Small Business Administration (SBA), which began administering the PPP last month as the coronavirus pandemic forced millions of businesses across the country to shut down, many loans for $150,000 or less—likely going to small businesses—were processed three days after larger loans. The lawsuits allege the banks held off on processing small businesses loans and gave precedence to larger companies, in violation of the "first come, first served" system under which the PPP was meant to operate.

"With allegations that major banks shuffled Paycheck Protection Program applications to prioritize larger loan amounts and bigger businesses, Main Street businesses are furious," said small business advocacy group Main Street Alliance. "This possibility points to a clear design flaw in the program that tried to use the private lending market, already rife with discrimination and putting profits over all, as the mechanism for small business relief."

The lawsuits were filed as Congress was preparing to pass a new relief package including over $300 billion more for the PPP—an effort to replenish the fund several days after it ran out of money. The Senate passed the bill approving additional funds Tuesday afternoon.

Both the Associated Press and the Financial Times detailed the distribution of funds through the PPP in reports on Tuesday.

The AP found that companies with thousands of employees, many of which were risking financial failure long before the coronavirus pandemic spread across the U.S., were given loans through the PPP.

At least 75 companies that received loans were publicly traded, while eight companies received the maximum loan allowed of $10 million. More than 4,000 of the loans approved by the SBA were for at least $5 million.

According to the Financial Times, Hallador Energy, a coal company based in Indiana, was one of the companies that received $10 million—weeks after it laid off 60 workers.

"Public companies that have access to other sources of money should not be using this," Charles Elson, a corporate governance expert at the University of Delaware, told the Financial Times. "Small businesses need this pot to survive."

Former Obama administration official Chris Lu tweeted that local businesses in his community have been unable to secure loans in recent days as large companies have monopolized the PPP's resources.

Business is down 90% at my neighborhood dry cleaner. They're still trying to pay their employees even though there's no work. But they can't get a small business loan because their bank stopped taking applications Somehow Formeall of these companies got loans. pic.twitter.com/xdycYAD02c — Chris Lu (@ChrisLu44) April 21, 2020

"This is why oversight is important. No matter when or who it hurts, big business and corporations will always try to cash in," tweeted J.D. Scholten, a Democratic congressional candidate in Iowa.

This is why oversight is important. No matter when or who it hurts, big business and corporations will always try to cash in. We need to look out for the little guy and the small businesses who drive our country's economy. https://t.co/B9iO6WoU4C — J.D. Scholten (@JDScholten) April 21, 2020

As Congress passed the new relief package promising more funding for small business loans, the Main Street Alliance said the federal government must consider grants for struggling companies.

"Small businesses are demanding that any new funding must come directly to them via subsidies, not loans, and it must prioritize those who were left out," the group said.