Iain Ashmore, who runs Dove Electrical in Barnsley, said NatWest closed his accounts after he received a £30,000 bounce back loan. He said the bank had closed his personal, savings, business and feeder accounts.
A spokesman for Mr Jarvis, who is the Labour MP for Barnsley Central, said: "Luckily, his wife banks with another bank, but he is the main earner of the house and so they were struggling significantly.
"Mr Ashmore states that his accounts were closed without warning in August and we have been trying to assist Mr Ashmore in obtaining his funds since that time. Sadly, we’ve mostly been unsuccessful. This has put the family in personal distress, but it has also caused redundancies in Mr Ashmore’s business.
"We have been back and forth with NatWest but they have only said that they’re entitled to do this, without giving us any information on why.
The spokesman added: "We’ve attempted to assist Mr Ashmore with also making a complaint to the Financial Ombudsman, but they will not investigate as Mr Ashmore has now issued legal proceedings. Since Mr Ashmore issued his claim, he has received £1,000 back from NatWest, but no other funds."
Mr Jarvis said: “It is concerning that Iain, and others in a similar situation, have seen their bank accounts closed down and been denied access to their own money, as a result of applying for bounce back loans.
“Bounce back loans are an important means of supporting businesses as they rebuild from the economic impact of Covid and play their part in supporting our wider recovery and renewal. It is, therefore, alarming that businesses who have taken out loans in good faith have been treated in this manner.
“I’m calling on financial providers to do the right thing; restore access to customers’ bank accounts and provide compensation to those affected.”
Mr Ashmore said: "Since NatWest closed my accounts I have had to make members of my staff redundant, I am now the sole worker for my business where as before we had three employees. .
"I have had sleepless nights wondering where I am going to get money from to pay our bills, our employees, our suppliers and ultimately ourselves."
"The bounce back loan was meant to be to bounce back from the pandemic, not to give banks the right to close accounts and make already struggling businesses struggle even more."
A NatWest spokesperson said: “Due to ongoing legal proceedings we are unable to comment on this case at this time.”
Support The Yorkshire Post and become a subscriber today. Your subscription will help us to continue to bring quality news to the people of Yorkshire. In return, you'll see fewer ads on site, get free access to our app and receive exclusive members-only offers. Click here to subscribe.