Biden-Harris Administration Announces New Rule to Increase Economic Opportunity for Returning Citizens
01 May 2024 - 7:43PM
Today,
Administrator Isabel Casillas Guzman, head of the
U.S. Small Business Administration (SBA) and the voice for
America’s 33 million small businesses in President Biden’s Cabinet,
announced that the Biden-Harris Administration has finalized a new
rule that will remove restrictions on SBA loan programs that
currently prevent many returning citizens, including those on
parole and probation, from being eligible for SBA-backed loans to
start or grow a business. As part of this rule change, the SBA will
also remove questions on criminal history from its applications.
Individuals who are currently incarcerated and those who have
previously defrauded the government will remain ineligible.
“For too long, small business ownership has been out of reach
for returning citizens,” said SBA Administrator Guzman.
“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. 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.”
“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.”
In addition to removing restrictions on loan programs for
the returning citizen population – including the nearly 4 million
Americans on parole or probation – the final rule will also
standardize most criminal history eligibility rules across SBA loan
programs, which collectively provide more than $40 billion in
capital annually to small businesses. It will also eliminate
unnecessary questions on criminal history from applications, which
can deter eligible entrepreneurs from applying. Instead, the SBA
will use best-in-class government and private-sector databases to
confirm program eligibility.
Studies show that entrepreneurship can reduce recidivism for
unemployed formerly incarcerated individuals by as much as 30%. The
unemployment rate for formerly incarcerated individuals is
typically about 27%, and the estimated median income for formerly
incarcerated individuals is approximately $10,000 for the first
year after 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 also continue to evaluate
individual loan applications for approval. In that context, lenders
can evaluate criminal history on an individualized basis—as part of
the full review of a loan application and consistent with federal,
state, and local law. Lenders can deny loans based on evidence of
an unacceptable credit risk.
For more information about SBA’s loan programs, financial
assistance, and other services, visit www.sba.gov.
###About the U.S. Small Business
Administration The U.S. Small Business Administration helps
power the American dream of business ownership. As the only go-to
resource and voice for small businesses backed by the strength of
the federal government, the SBA empowers entrepreneurs and small
business owners with the resources and support they need to start,
grow, or expand their businesses, or recover from a declared
disaster. It delivers services through an extensive network of SBA
field offices and partnerships with public and private
organizations. To learn more, visit www.sba.gov.
Christine Saah Nazer
U.S. Small Business Administration
press_office@sba.gov