Coronavirus small business loans exclude people with criminal records

Michelle E. of Scottsdale, Arizona, was relieved when President Trump last month promulgated the vast recovery plan intended to keep the U.S. economy afloat during the coronavirus pandemic.

Michelle and her husband have owned a small hardwood flooring business for 18 years. She hoped the $ 350 billion legislated for small business loans would help them avoid laying off one of their five employees, who she says are like family. She therefore obtained a loan application through her bank.

But while she was filling it up, Michelle saw the question: Have any of the business owners pleaded guilty or been on probation for a criminal offense? Michelle immediately thought of her husband, who is on probation because he pleaded guilty to a charge of theft after taking someone else’s rifle scope home on a hunting trip. ‘he says he did accidentally. Her name and last name are withheld because her criminal case and the couple’s loan application are ongoing.

“Because of this, our employees cannot get help from the United States government? Michelle said.

It’s a bit of a frustration with the logistical problems the Trump administration’s deployment of the CARES Act. A set of new law enforcement regulations, issued by the Small Business Administration, prohibits small business owners with criminal records from accessing the loans they desperately need.

“We have never seen such a drastic compulsory disqualification on the basis of a criminal record, in any area of ​​the law”, wrote the Collateral Consequences Resource Center, a non-profit, non-partisan website that tracks how federal, state and local laws affect those who have been previously charged or convicted. The site is managed by Margaret Love, who was the United States’ pardon attorney during the Clinton administration.

It is not known how many small business owners nationwide have criminal histories. But The Sentencing Project, a research and advocacy group, estimated that as many as 100 million Americans have been arrested or convicted in the past, and that there are over 30 million small businesses across the country, according to the Small Business Administration. Because people with a particular criminal history often cannot find employment, many start their own business, from plumbing to catering to fitness, experts say.

Add to that the people who work for every small business owner, and you’ll see how the new regulations can have a cascading negative effect on employment, Love said in an interview.

The Small Business Administration has yet to respond to questions from the Marshall Project about its new lending guidelines.

Certainly, under previous presidencies, the Small Business Administration examined many aspects of the criminal records of loan applicants, and more broadly whether they are of “good character.” Part of the reason is that the banks, which the agency uses to distribute loans, typically perform background checks as part of their regular loan process.

And in the aftermath of any disaster, some criminal companies and crooks come out in search of relief money. In the past, negotiations between the Small Business Administration and the banks on the measures necessary to prevent this from happening have often been lengthy.

But rarely has there been such an urgent need to distribute money to businesses. quickly, widely and without additional paperwork, economists say.

Moreover, never in recent history has the United States so many conservatives and liberals agreed that people with criminal histories deserve a second chance, especially small business owners who create jobs.

the CARES Act as passed by Congress included details of who was and was not eligible for the loans, but experts noted that it did not require anything on criminal records.

Entrepreneurs with criminal records across the country said in interviews they were confused about the details of the new regulations, which has changed three times in the last week. An Austin, Texas man who owns a web design business said he couldn’t determine if his misdemeanor, a charge last year for a first DUI, would prevent him from getting a ready.

The CARES Act includes two types of loans for businesses employing 500 people or less: the Paycheck Protection Program, intended to help businesses continue to pay their employees during the coronavirus crisis, as well as a expansion of loans to businesses affected by disasters.

For the paycheck program, the Small Business Administration’s new policy says business owners cannot get a loan if they face criminal charges or have been convicted of a felony in the past five years. . But the real application form seems to exclude more people: it also asks you if, during the same period, you have pleaded ‘no challenge’, been placed in a diversion program – which often takes place outside of court and does not mean that you’ve admitted your guilt – or gone on probation or parole at any time in a felony case.

The second loan program also puzzles many applicants with criminal records. the online portal Asking for federal help asks a three-part question about your criminal history, but the answers available are only “yes” or “no.” Apparently a small business owner now convicted of murder and another accused but not convicted 20 years ago of drunk driving should both check “yes”.

The Small Business Administration did not respond to multiple requests for clarification on Tuesday.

Critics of the new regulations have said the rules waste precious time examining people’s pasts as so many people lose their lives or livelihoods every day.

A 10-year-old New Jersey pet food store owner convicted of a felony put it this way in an email to the Collateral Consequences Resource Center: On their roofs if they had ever faced a criminal charge.

“And if someone answered yes,” he wrote, “they would go to the house next door. ”

After the publication of this article, The Marshall Project received a loan from this program. The loan has no requirements that would compromise The Marshall Project’s editorial independence.

About Cheryl Viola

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