Civil rights groups sue Small Business Administration over PPP loans

A federal loan program designed to keep small businesses afloat during the Coronavirus pandemic wrongly excludes business owners with a criminal past, according to a lawsuit filed Tuesday by the American Civil Liberties Union and other legal rights groups.

The Small Business Administration’s Paycheck Protection Program excludes business owners with criminal records from applying for a low-interest loan. This unfairly deprives them of crucial government assistance, according to the trial, who noted that the policy particularly disadvantages African Americans and Hispanics as they represent a disproportionate share of those convicted.

In court documents, previously convicted business owners have asked a Maryland judge to eliminate criminal exclusion.

“Formerly incarcerated people who have paid off their debt to society deserve a fair chance at success,” Defy Ventures CEO Andrew Glazier, whose association trains former inmates to run a business, said in a statement. business. “The role of the SBA is to support the success of small businesses, not to impose rules based on uninformed and discriminatory value judgments on their suitability to receive support.”

The PPP offers forgivable loans to business owners if they keep workers on the payroll. The program exclude businesses if a loan applicant with 20% or more ownership of the business is in jail, on probation, on parole, under indictment, or has been convicted of a felony in the past five years. Homeowners who have been charged or who have pleaded guilty or without challenge are also ineligible to participate in the program.

“If I have already paid off my debt to society and successfully reinserted myself to the point of being able to launch and build a viable business, the fact that I am a criminal should not automatically disqualify me from the same help that is given to others. business owners, ”said Frederick Hutson, a small business owner in Nevada with a criminal record, who founded Pigeonly, a digital platform that allows people to communicate with an incarcerated family member. business is difficult, doing it as a convicted felon is even more difficult. ”


Small Businesses Worried About PPP Money

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Congress created the PPP as part of the broader Coronavirus Aid, Relief and Economic Security Act and has specified that any business that meets the size requirements is eligible for a loan. The SBA later added criminal exclusion, the ACLU said.

The SBA last week reduced the timeframe from five years to one year. SBA administrator Jovita Carranza said in a final decision earlier this month that the lowering of the deadline “is more in line with Congress’ intention to relieve small business” during the pandemic.

The SBA has not explained why such exclusions exist, said the ACLU, the Public Interest Law Center and the Washington Lawyers’ Committee for Civil Rights and Urban Affairs, the groups that filed the complaint. An SBA official told CBS MoneyWatch on Tuesday that the agency had no comment on the lawsuit.

John Garland, who owns a signage business in New York City, said the SBA should not place any restrictions on people with a criminal background who seek P3 funds. Garland said he faces pending petty theft charges, a case that prevented him from getting a loan.

“There is no reason that our company should be denied the chance to survive this crisis and continue to grow in the future or that my employees cannot be paid,” Garland said in a statement.


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