Feds change loan rules to allow recent ex-cons to participate

WASHINGTON — The Trump administration has revised the rules for those with criminal convictions to receive Paycheck Protection Program loans in order to expand participation in the program.

Originally, anyone with a criminal conviction or who had been in a diversion program in the past five years could not participate. But at the urging of lawmakers led by Rep. Dina Titus, D-Nev., the Small Business Administration revised that period to one year.

The change affects only those with convictions for felonies unrelated to money. It’s still five years for those convicted of crimes including fraud, bribery, embezzlement or making a false statement on an application for a loan or federal financial assistance.

It also eliminates participation in a diversion program as a barrier to receive the loans.

Roughly 1 in 3 Americans has a criminal record, Titus noted in a May 19 letter to the Small Business Association that was signed by more than a dozen House lawmakers, including Rep. Steven Horsford, D-Nev.

Titus on Tuesday praised the administration’s action as “a step in the right direction.”

“Over the last few months, I’ve heard from several small business owners in Las Vegas who have been unable to access PPP loans because of the Small Business Administration’s arbitrary eligibility rules,” Titus said.

Titus said the prevention of people receiving PPP loans who entered pretrial diversion programs to avoid criminal prosecution was “especially alarming.”

The lawmakers also found troubling the penalty for those who had completed their sentences and now own businesses with workers who relied on them for jobs.

“Denying assistance to citizens who have served their time is unjust and harmful to our nation’s recovery,” Titus said, adding that the loans were created “to give small businesses a lifeline and keep their employees on the payroll.”

The Small Business Administration, in a news release, said the revision was at the discretion of the administration and in line with the bipartisan support for criminal justice reform led by President Donald Trump.

Paycheck protection loans were created by Congress and signed into law by the president as part of efforts to help small businesses and protect jobs following the wave of shutdowns by states due to the coronavirus pandemic.

Contact Gary Martin at gmartin@reviewjournal.com or 202-662-7390. Follow @garymartindc on Twitter.