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New SBA rules will benefit returning citizens’ efforts to start and run a business
Small business loan applicants look to benefit from a new rule by the Biden-Harris Administration. PHOTO/GETTY IMAGES
New SBA rules will benefit returning citizens’ efforts to start and run a business
The Biden-Harris Administration has finalized a new rule removing restrictions on programs preventing returning citizens, including those on parole and probation, from being eligible for SBA-backed loans to start or grow a business.
The new rule was announced by Administrator Isabel Casillas Guzman.
“For too long, small business ownership has been out of reach for returning citizens,” Guzman said in a statement. “Today, the SBA is taking a massive step forward to foster equity and remove unnecessary barriers that prevent countless individuals from starting and running a business.
“Economic opportunity can help reduce recidivism, trauma, and systemic discrimination that hold entire generations and our national economy back,” added Guzman. “Under the Biden-Harris Administration, more Americans than ever are filing applications to start a new business, and this rule change will build on that historic momentum by providing a second chance to those seeking the American Dream of entrepreneurship.”
Along with removing restrictions on loan programs for returning citizens, the rule standardizes most criminal history eligibility rules across SBA loan programs, which collectively provide more than $40 billion in capital annually to small businesses. It also eliminates unnecessary questions on criminal history from applications, which can deter eligible entrepreneurs from applying. The SBA will instead use best-in-class government and private-sector databases to confirm program eligibility.
According to a release, the rule change will have no negative impact on the loan repayment process, and the SBA will continue to diligently perform fraud checks on all loan applications in accordance with its Risk Mitigation Framework. Lenders will continue to evaluate individual loan applications for approval.
“This important change from SBA will break down barriers to financing for millions of aspiring entrepreneurs who are moving forward in their lives despite having a criminal history,” said Consumer Financial Protection Bureau Director Rohit Chopra. “Lifting this blanket ban on loan eligibility will help more Americans build and expand small businesses.”
