Some People with Criminal Records Excluded from Small Business Relief in Spite of Trump's Criminal Justice Reform Platform

April 27, 2020

 

Like millions of other small business owners facing the financial weight of the coronavirus pandemic, Vincent Bragg saw the federal government's Payroll Protection Program as a potential lifeline.

 

But the fifth question on the loan application immediately disqualified Bragg from securing a loan to help pay the salaries of the nine people on the company payroll: "Is the Applicant ... subject to an indictment ... or presently incarcerated, or on probation or parole?"

 

Bragg, who served five years in prison on a drug conspiracy charge, has one year left on probation.

 

"It's kind of discouraging," said Bragg, the CEO of the creative agency, ConCreates. "I've gotten out of prison and I feel like I've done everything right. So, to be penalized for my past ..."

    Under regulations issued by the Small Business Administration, formerly convicted felons like Bragg who are still on probation or have been convicted, pleaded guilty or pleaded no contest to a felony in the last five years, are disqualified from the loan program.

     

    The exclusionary rules cut a stark contrast to the criminal justice reform bill President Donald Trump signed into law in 2018 and the policies his reelection campaign is highlighting -- including in a powerful Super Bowl ad this year -- in an appeal to minority voters in the 2020 election.

     

    Trump appeared unaware of the policy when asked about it at a briefing on Monday. But on Tuesday, Treasury Secretary Steve Mnuchin said the rules had already been tweaked early on and were unlikely to change further.

     

    "There were people that had misdemeanors who weren't allowed to access the program. It was much longer than five years," Mnuchin said of the original restrictions. "So, we have already taken that into account."

     

    Hundreds of thousands of loan applicants without criminal histories have also been left waiting after funding dried up. But while Congress is in the midst of approving a second tranche of $310 billion for the program, the latest bill does not include a fix to allow those with certain criminal records to access the funds.

     

    But criminal justice reform advocates point out that the original legislation that funded the small business loan program, known as PPP, included no language barring people with criminal records from accessing the financial relief. And the Small Business Administration has changed its PPP rules at the White House's request on other issues, such as ensuring religious organizations could access the funds.

     

    "Given the amount of bipartisan support that we've seen bubble up over the last five years for the issue of criminal justice reform and second chances for people coming home, this is incredibly disappointing," said Jessica Jackson, a criminal justice reform activist who worked with the White House to pass the First Step Act and is now the chief advocacy officer for the REFORM Alliance. "I'm hopeful that his administration is going to work to remove this discriminatory provisions from the rule."

     

    But so far, there has been no movement. Jackson and other criminal justice reform advocates have been lobbying the White House and Capitol Hill to address this rule for more than three weeks.

     

    Rep. Cedric Richmond, a Democrat from Louisiana, first penned a letter to Mnuchin and SBA Administrator Jovita Carranza on April 6 on behalf of 10 other members of Congress, warning of the impact not only on small business owners with criminal records, but their employees.

     

    "The Paycheck Protection Program was designed by Congress to give all small businesses a lifeline. The employees of the formerly incarcerated are just as entitled to remaining on payroll as other Americans," Richmond wrote.

     

    A coalition of conservative-minded criminal justice reform advocates have also appealed directly to Trump, reminding him in a letter on Monday that he recognized April as "Second Chances Month."

     

    "With respect to your proclamation we respectfully request that your Administration recommend the inclusion of those small business owners who have paid their debt to society and earned a second chance," wrote the group, which includes Americans for Prosperity, FreedomWorks and the Faith & Freedom Coalition among others.

     

    A source familiar with discussions between criminal justice reform advocates and the White House said White House officials have said they are still working on the issue. But the advocates are missing the support of a top White House official who could otherwise force through the logjam: Jared Kushner, the President's son-in-law who has spearheaded criminal justice reform efforts at the White House but is now focused on medical supply chain issues.

     

    The President is still planning to tout his criminal justice reform efforts as part of his reelection campaign and his campaign organization has been increasing its outreach to minority communities. The First Step Act, which Trump signed into law in 2018, authorized the early release of thousands of federal inmates, eased mandatory minimum sentencing and expanded reentry programs.

     

    But now, reformed felons like Bragg are left wondering why that policy mindset doesn't extend to the small business loans.

     

    Unable to secure a loan, Bragg and the eight others on his full-time staff -- nearly all of whom are formerly incarcerated individuals -- have instead had to take pay cuts. And with no new revenue coming in the door, Bragg is fighting to keep his business alive and said he is hoping to avoid lay-offs. He has also launched a fund to help small businesses like his get financial support.

     

    "A lot of these individuals turn to entrepreneurship because of the barriers they face with employment," Bragg said. "This pandemic has caused those entrepreneurs to suffer and not get any help."

     

    Quan Huynh, the owner of Jade Janitors who is also on parole, has already had to fire four of his seven employees since the beginning of the month after losing 70% of his projected annual revenue.

     

    Huynh was released on parole in 2015 after serving 16 years in prison for second-degree murder. Since his release, Huynh built his janitorial business, hiring mostly formerly incarcerated individuals and now also manages the post release program in southern California for Defy Ventures, that helps currently and formerly incarcerated individuals pursue entrepreneurship.

      Mark Holden, a criminal justice reform advocate with Americans for Prosperity, said he hoped the Trump administration would remedy the issue, calling it "inconsistent" with Trump's record so far on criminal justice reform.

       

      "I'm not blaming anybody," Holden said. "We just want to get it fixed. It's inconsistent with what we've seen from the First Step Act."

       

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