Bipartisan Bill Seeks PPP Access Despite Criminal Records

By Andrew Kragie
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Law360 (June 5, 2020, 4:06 PM EDT) -- A bipartisan Senate quartet has proposed changes to the Paycheck Protection Program to ensure access for small-business owners who currently can be blocked from the forgivable pandemic-relief loans because of criminal records ranging from any pending charges and past felony convictions to probation and pretrial diversion.

The Paycheck Protection Program Second Chance Act would guarantee eligibility for business owners previously arrested or convicted under federal, state or tribal laws. A carveout would allow the Small Business Administration to block applications from owners convicted of financial fraud within the last five years.

The agency's PPP application form currently requires business owners with a stake over 20% to disclose all types of pending charges as well as any felony charges in the past five years, including ones resolved with pretrial diversion. The form also asks about current probation and parole, which the bill does not address. The measure makes clear that currently incarcerated people would remain ineligible.

Sen. Rob Portman, R-Ohio, introduced the bill Tuesday with Sens. Ben Cardin, D-Md.; James Lankford, R-Okla.; and Cory Booker, D-N.J. The sponsors cover the ideological spectrum, according to GovTrack rankings: Portman is a moderate Republican, Cardin falls in the middle of the Democratic Party, Lankford is a staunch conservative and Booker is one of the most liberal senators.

"We should celebrate folks who have done exactly what society asked of them: they turned away from crime, started a business to support themselves and their families, and contributed to their communities," Portman said in a statement. "An estimated 1 in 3 American adults has a criminal record; and because people with records often have trouble finding employment, many of them have gone on to start their own businesses after they have paid for their mistakes."

The measure was referred to the Small Business Committee, where Cardin is the top Democrat. Spokespeople for the panel's chairman, Sen. Marco Rubio, R-Fla., did not immediately respond to a request for comment Friday.

Portman's office told Law360 the bipartisan bill is similar to language included in the House-passed Heroes Act, a sweeping $3 trillion relief package crafted by Democrats and unlikely to get consideration in the GOP-led Senate.

With its bipartisan support, Portman's narrow bill might pass Congress quickly, but the loan program is set to stop accepting applications June 30. It seems unlikely to run out before then: As of Thursday, the SBA reports using about $511 billion of the total $660 billion authorized to guarantee the private loans.

The bill brings endorsements from outside groups including criminal justice reform advocates and conservative groups: the American Civil Liberties Union, the American Conservative Union, FreedomWorks, the Prison Fellowship, Americans for Tax Reform, the Justice Action Network, #cut50, Collateral Consequences Resource Center, the National Association of Criminal Defense Lawyers, Digital Liberty, the Safer Foundation, the Jewish Council for Public Affairs and The Council of State Governments Justice Center.

Congress has acted quickly on some changes to the small-business loan program. On Friday, President Donald Trump signed into law the PPP Flexibility Act, which gives recipients more time to use the money and loosens some rules. That law was first proposed May 15, passed the House May 28 and won Senate approval on Wednesday.

However, even if the PPP Second Chance Act becomes law quickly, it's not clear how many businesses could benefit before the June 30 application deadline.

--Editing by Katherine Rautenberg.

For a reprint of this article, please contact reprints@law360.com.

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