Criminal records keep small-business owners from aid program

Shown is a portion of a Small Business Administration Paycheck Protection Program Borrower Application Form, Tuesday, April 21, 2020 in Washington. The Paycheck Protection was supposed to be a lifeline for small businesses, helping them stay afloat and keep their employees on the payroll during the coronavirus pandemic. But guidelines from the Small Business Administration say that businesses are ineligible if someone who owns at least 20 percent of the company is incarcerated, under indictment, on probation or parole or had been convicted of a felony within the last five years. Ineligible would-be applicants and advocates say the restrictions are a slap in the face for those who have served their time, especially from an administration that has trumpeted second chances.(AP Photo/Wayne Partlow)
Shown is a portion of a Small Business Administration Paycheck Protection Program Borrower Application Form, Tuesday, April 21, 2020 in Washington. The Paycheck Protection was supposed to be a lifeline for small businesses, helping them stay afloat and keep their employees on the payroll during the coronavirus pandemic. But guidelines from the Small Business Administration say that businesses are ineligible if someone who owns at least 20 percent of the company is incarcerated, under indictment, on probation or parole or had been convicted of a felony within the last five years. Ineligible would-be applicants and advocates say the restrictions are a slap in the face for those who have served their time, especially from an administration that has trumpeted second chances.(AP Photo/Wayne Partlow)

WASHINGTON – Damon West was hoping the government's coronavirus rescue package for small-business owners would help replace the income he's lost now that he can't travel the country as a keynote speaker.

But then he got a call from his accountant. A question on the application form asked whether, within the last five years, he had been convicted of or pleaded guilty or no contest to a felony or “been placed on any form of parole or probation." Another asked whether anyone who owns at least 20% of the company was incarcerated, under indictment or on probation or parole. If so, they are ineligible.

It was a gut punch for West. In 2009, he was sentenced to life in prison but made parole in 2015 and now works as an author, teacher and speaker, visiting schools and correctional facilities to talk about how he turned his life around.

“You go and you pay your debt, and you’re still paying your bill,” he said.

The Paycheck Protection Program, which already doled out $350 billion and is now awaiting another cash infusion, is supposed to be a lifeline for businesses teetering on the edge, helping them stay afloat and keep their employees on the payroll during the pandemic. Independent contractors and the self-employed also qualify. But not, it turns out, if they have had certain run-ins with the law.

The Small Business Administration, which oversees the program, did not respond to questions about the reasoning. And Treasury Secretary Steven Mnuchin said Tuesday evening that there were no plans to lift the rules, which he said were less onerous than those originally envisioned. But ineligible would-be applicants and their advocates say they are a slap in the face for those who have served their time, especially from an administration that has trumpeted second chances. They note many businesses run by formerly incarcerated people employ other people with criminal records who could be driven back to crime if they lose jobs.

Robert Rooks, co-founder of the Alliance for Safety and Justice, a national criminal justice reform organization, said he'd heard from multiple small-business owners frustrated by the provision.

“I'm hearing that people have worked their entire life to get to this place where they have something they can call their own. They’ve paid their debt to society, clawed their way to this point and should be able to get what everybody else is able to get to keep their business afloat," he said.