In an effort to increase economic opportunities for returning citizens, the Biden-Harris Administration has implemented a new rule aimed at removing barriers that have long hindered individuals with criminal histories from accessing small business loans. The rule, finalized by Administrator Isabel Casillas Guzman of the U.S. Small Business Administration (SBA), will allow more returning citizens, including those on parole and probation, to be eligible for SBA-backed loans to start or grow their businesses.

SBA Administrator Guzman emphasized the significance of this rule change, stating, “For too long, small business ownership has been out of reach for returning citizens.” She highlighted the administration's commitment to fostering equity and removing unnecessary obstacles that impede individuals from pursuing entrepreneurship, citing the potential of economic opportunity to reduce recidivism and systemic discrimination.

Consumer Financial Protection Bureau Director Rohit Chopra also praised the new rule, affirming that it will "break down barriers to financing for millions of aspiring entrepreneurs who are moving forward in their lives despite having a criminal history."

The rule not only removes restrictions on loan programs for returning citizens but also standardizes criminal history eligibility rules across SBA loan programs, which collectively provide over $40 billion in capital annually to small businesses. By eliminating questions on criminal history from applications and utilizing reliable databases to confirm program eligibility, the SBA aims to facilitate access to financing for aspiring entrepreneurs with criminal backgrounds.

Studies have shown that entrepreneurship can significantly reduce recidivism rates for formerly incarcerated individuals, making economic opportunities crucial in promoting successful reentry into society. The SBA's rule change is expected to positively impact the economic prospects of individuals with criminal histories, contributing to a more inclusive and equitable business environment.

Importantly, the rule change will not compromise the loan repayment process, as the SBA will continue to conduct fraud checks on all loan applications. Lenders will evaluate individual loan applications on a case-by-case basis, considering factors such as credit risk in their decision-making process.

For those interested in learning more about SBA's loan programs and financial assistance, additional information can be found on their official website at www.sba.gov. The Biden-Harris Administration's commitment to expanding economic opportunities for returning citizens reflects a broader effort to support entrepreneurship and empower individuals to pursue their business endeavors.