April 29, 2024

The Small Business Administration (SBA) has announced changes to the loan program’s restrictions concerning an applicant’s criminal history. According to the SBA’s administrator, the federal agency intends to ban the restrictions on those with criminal backgrounds. This decision could benefit those with criminal records who want to start or expand a business. However, interested parties must complete their sentences to qualify for the loan programs.

The new rules by the Small Business Administration would remove most restrictions on loan programs based on an applicant’s criminal record. This change could improve eligibility for SBA loans for millions. The rules also enforce a ban-the-box on SBA loan applications. This change would prevent criminal history questions from appearing on loan applications.

The current eligibility SBA loan requirements often confuse applicants with criminal records, discouraging many from getting a loan. The SBA worked to correct this issue by making it easier for those with criminal records to apply. It also addressed disparities in the system and growth opportunities, especially the detrimental effect on black business owners. 

According to the Congressional Black Caucus (CBC) chairman, the announcement “reflects our shared commitment to supporting Black-owned small business owners and expanding access to capital to Black and underserved communities.” The chairman also commented, “By finally banning the box on SBA loan applications, we are not just changing policy; we are eliminating unnecessary barriers to entrepreneurship, boosting our economy, creating well-paying jobs, and generating Black wealth.”

Many previously incarcerated individuals struggle to obtain work or loans due to discrimination about their criminal history. The Bureau of Justice Statistics conducted a study involving individuals released from state and federal prisons nationwide in 2022. Of these people, Nevada saw roughly 4,500 people fully rejoin the population. The SBA hoped to help those who finished their sentences re-enter the workforce by dedicating $52 billion in “capital, disaster relief, and bonding to small businesses and disaster-impacted communities.”

The Bureau of Justice Statistics ran a similar study concerning 51,500 people released from federal prisons in 2010. According to the Bureau, one-third of released individuals remained jobless at some point in the first four years after release. During this timeframe, employment for released individuals never exceeded forty percent. The new SBA rule could provide opportunities for those interested in starting a business.

It remains uncertain when the SBA loan reforms will take effect. Regardless, anyone interested in starting a business should consider running a self-background check. This check would allow them to correct any errors in their report and prepare to answer any questions about their background.

Click here to run a self-background check to prepare for your next job interview.