Increasing Employment Opportunities for Pennsylvanians with Criminal Histories

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A criminal record shouldn’t be a barrier to the Paycheck Protection Program | Opinion

This commentary was originally published in the Pennsylvania Capital-Star

By Claudia De Palma, Staff Attorney, Public Interest Law Center

Jamie Gullen, Supervising Attorney, Community Legal Services of Philadelphia

April 27, 2020 — Tianna is a 37-year-old woman who owns her own construction company in Philadelphia that employs ten people. As the COVID-19 crisis began intensifying in Pennsylvania and Tianna’s business was ordered to close, Tianna struggled to figure out how she could keep paying her workers.

She learned about the Paycheck Protection Program passed by Congress as part of the CARES Act and immediately applied for loan relief for her business. She also applied for a loan advance from the Economic Injury Disaster Loan (EIDL) program, also authorized by the CARES Act. She hasn’t heard back from either program, and wonders if it is because she checked the box saying she has a felony conviction record.

When non-essential businesses shut down, Baseemah, a 27-year-old woman who lives in Montgomery County and started her own cleaning business, lost most of her contracts, which are with retail stores. Based on the rules set forth by the Small Business Administration (SBA) for COVID-19 relief, her single felony drug conviction would make her ineligible for funding to keep her business afloat and to pay the people that work for her.

These are just two of the thousands of stories from small business owners across Pennsylvania who have lost their livelihoods due to the COVID-19 crisis and are struggling to support their workers.

A pandemic is not the time to create additional barriers to desperately needed aid, particularly to small businesses that are part of the fabric of communities across America.

From Philadelphia to Centre to Westmoreland counties, every corner of the state is facing economic devastation. For people with criminal records, the uphill climb for relief is even steeper. Even in a booming economy, people with records experience unemployment at five times the average rate.

Due to widespread barriers to employment, people with records often turn to starting their own small businesses as a way to support their families and contribute to their communities.

In passing the CARES Act, Congress recognized that small businesses are the engine of the U.S.’s economy. Here in Pennsylvania, there are around 1 million small businesses, making up 99 percent of our economy.

Congress also recognized that a large, rapid infusion of financial aid would be necessary to keep these small businesses running during the pandemic.

To that end, the CARES Act authorized the Paycheck Protection Program (PPP), which makes government-backed business loans more widely available, expands the types of expenses that can be covered, and makes portions of the loans forgivable.

The CARES Act also allows business owners to apply for an advance on an Economic Injury Disaster Loan (EIDL) that does not have to be repaid.

The CARES Act does not impose any limits on eligibility for any of this assistance based on a business owner’s past arrest or conviction record. However, as first reported by the Collateral Consequences Resource Center, the SBA has attached sweeping, mandatory criminal record restrictions to PPP funds, effectively shutting down previously thriving businesses owned by such people as Tianna and Baseemah.

Not only are these SBA-generated exclusions nowhere in the CARES Act passed by Congress, they are also much more prohibitive than the eligibility restrictions the SBA applies to its existing loan program.

Under pre-COVID loan guidelines, businesses were only automatically disqualified from small business loans if an owner or manager was currently serving a sentence or facing charges.

But now, the SBA has made PPP relief funds categorically inaccessible to most small business owners who have been convicted of a felony in the past 5 years.

To make matters worse, the SBA’s PPP application form flatly informs borrowers that even in some cases where a business owner was charged with a felony—not convicted—“the loan will not be approved.”

And the SBA’s application form for COVID-19 EIDL funding is even more discouraging, reportedly asking applicants to disclose whether they have ever been convicted of any crime.

The unwarranted restrictions placed on this emergency relief will hobble small businesses and nonprofits across the state, and exact a particularly heavy toll on minority business owners and employees, who are often disproportionately affected by the criminal legal system.

Last week, Community Legal Services of Philadelphia and the Public Interest Law Center, in collaboration with a bipartisan group of advocates and stakeholders, sent letters to Congress, the Treasury Secretary, and the administrator of the SBA, urging them to dismantle these harsh and discriminatory exclusions.

Our request was echoed by a coalition of conservative groups in a letter to U.S. Senate Majority Leader Mitch McConnell, R-Ky., this week.

Fortunately, Congress and the SBA still have the opportunity to get it right. Congress should explicitly remove all restrictions on eligibility for emergency small business relief based on arrest and conviction records.

The SBA should roll back the over-broad restrictions it has placed on access to these funds to at least the regular restrictions that guide their preexisting loan programs, if not further.

We are heartened that a group of 21 Pennsylvania legislators, led by state Sen. Anthony Williams, D-Philadelphia, have called on the SBA to do just that.

A pandemic is not the time to create additional barriers to desperately needed aid, particularly to small businesses that are part of the fabric of communities across America.

One in three working age Pennsylvanians has a criminal record, and across the Commonwealth these individuals are poised to be some of the hardest hit financially.

To get through this crisis, we need relief efforts and policies that include these members of our community, rather than exclude them.