Small Business Owners With A Criminal History Can Now Apply For P3 Loans, SBA Says
The Small Business Administration officially changed its rule on Thursday, easing restrictions on potential borrowers with criminal records.
Until probation or parole has taken place in the past five years, business owners can receive help through the P3, the SBA said. Criminals are still not allowed to use the rescue fund, but homeowners with pending crimes are eligible to receive loans, the agency said.
Previously, the program excluded businesses if a loan applicant with 20 percent or more ownership of the business was in jail, on probation, on parole, under indictment, or was convicted of a felony. Homeowners who have been charged or who have pleaded guilty or without challenge are also ineligible to participate in the program.
But the SBA said the restriction should be limited to business owners accused of a crime involving “fraud, bribery, embezzlement or misrepresentation in a loan application or loan application. ‘federal financial aid’ over the past five years. For other crimes, the restriction is limited to only one year.
Last week, the American Civil Liberties Union filed a trial against the SBA and the Treasury Department arguing that the loan program wrongly excludes business owners with criminal histories.
Businesses have until June 30 to apply for a PPP loan, if they haven’t already.
From Tuesday, more than 4.67 million loans worth nearly $ 515 billion have been distributed through the PPP, leaving about $ 130 billion in the fund.
The program was designed to help businesses with fewer than 500 employees weather the coronavirus pandemic and the economic lockdown that followed. Through PPP, small businesses could receive loans of up to $ 10 million. If at least 60 percent goes to maintain the wage bill, the government will forgive it, essentially turning the money into a subsidy.
When it was first launched, the program came under scrutiny and criticism for granting multi-million dollar loans to large publicly traded companies.
At least 439 state-owned enterprises have received forgivable loans totaling more than $ 1.39 billion under the program, according to the Washington, DC-based data analytics company. FactSquaré. Of those companies, 69 returned the money, or about $ 436 million.