On Sep. 15, SBA on criminal justice review rules for business loans.
SBA proposed to amend criminal justice review regulations for business loan programs.
Removed barriers to capital for entrepreneurs with certain types of justice involvement
Standardized eligibility rules across SBA capital programs and reduced subjectivity.
Impacted Programs
Amended regulations governing SBA's business loan programs, 7(a) Loan Program, 504 Loan Program, Microloan Program, and Intermediary Lending Pilot Program (ILP).
As well as Surety Bond Guarantee Program (SBG), and the Disaster Loan Program.
Except for the COVID Economic Injury Disaster Loan (EIDL) Disaster Loan Program.
Regulation Revisions
Application revised to ask current incarceration status; defined verification methods.
Allowed SBA lenders to follow their own policies on criminal background checks.
Deemed businesses with owners currently incarcerated and those who have previously committed fraud against the government as ineligible for all SBA capital programs.
Revised 13 CFR 109.400 for ILP loans to remove the restrictions on associates of an applicant who are on probation/parole/have been indicted but not convicted of felony.
13 CFR 115.13(a)(2)(i) for surety bond applicants revised to remove restrictions on a principal bidding for a contract who is under indictment but not convicted of a felony.
Removed restrictions on businesses with an associate who is on probation, parole, or is under indictment but not convicted of a felony for 7(a), 504 loans (13 CFR 120.110).
Also removed restrictions on businesses with associate who is currently on probation or parole for an offense involving fraud or dishonesty for Microloans (13 CFR 120.707).
Restrictions on principal owners of damaged property who are on probation or parole following conviction for serious criminal offense for EIDLs removed (13 CFR 123.101).
Removed certain restrictions for Immediate Disaster Assistance Program (IDAP) loans.
For businesses with an associate who is presently under indictment but not convicted, on parole or probation; that has ever been charged with, arrested for criminal offense.
Consultation
Comments on proposed amendments must be submitted on or before Nov. 14, 2023.
Apr. 2024 SBA Final Rule
On Apr. 30, 2024, SBA published final rule in federal register, effective May 30, 2024.
Rule finalized as proposed while retaining current prohibitions re criminal indictments.
May 2024 SBA Rule Adoption
On May 1, 2024, SBA reported rule to remove restrictions on SBA loan programs that prevent many returning citizens, including those on parole and probation approved.
