More small business owners with past felony convictions can now apply for Paycheck Protection Program loans.

The U.S. Small Business Administration announced on Friday that the look-back period for nonfinancial criminal convictions had changed to one year. Previously, businesses were ineligible for PPP loans if any owner had a felony conviction in the last five years. The new rule applies to PPP borrowers who have been convicted, pleaded guilty or no contest, or been placed on parole or probation.

For felonies involving fraud, bribery, embezzlement or a false statement in a loan application or an application for federal financial assistance, the look-back period remains five years.

Pretrial diversion status would no longer affect PPP eligibility, the SBA said. But PPP loans are still not available if the business owner or any individual owning 20 percent or more of the business is currently incarcerated, on probation or parole, or subject to an indictment, criminal information, arraignment or other means by which criminal charges are brought, according to the revised application.

The SBA said in a statement that the changes were made “in furtherance of President [Donald] Trump’s leadership and bipartisan support on criminal justice reform.”

The five-year look-back period had received criticism since the PPP’s April launch for the negative effect the restriction would have on small business owners. The CARES Act, which authorized the program, did not exclude business owners with felony convictions. The restriction instead was made by the SBA and Treasury.

Members of Congress from both parties began reaching out to the agencies in April to address the look-back period.

Business Owners with Felony Convictions Can Now Apply for PPP Loans

by Banker & Tradesman time to read: 1 min
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