Could Your Criminal Case Prevent You From Getting Disaster Relief?

The federal government has initiated the Paycheck Protection Program (“PPP”) which authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.  The loan terms will be the same for everyone.

The loan amounts will be forgiven as long as:

  • The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
  • Employee and compensation levels are maintained.

Beyond the basic qualification criteria, however, are factors that could prevent business owners from receiving a PPP loan.  If a person is currently involved in any bankruptcy their loan will not be approved.  Furthermore, if a person has ever received a loan from the Small Business Administration (“SBA”) and that loan is currently delinquent or has defaulted in the last 7 years and caused a loss to the government, the loan will not be approved.

Specifically, the application form asks:

Is the Applicant (if an individual) or any individual owning 20% or more of the equity of the Applicant subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction, or presently incarcerated, on probation or parole?

This means that if a person has a pending criminal case, is in jail or prison or is currently being monitored by a court, probation or parole department, they will be automatically disqualified from receiving this financial assistance.

Also, a specific category of crimes has been identified by the federal government as an automatic disqualification for the PPP.  The application form asks:

Within the last 5 years, for any felony, has the Applicant (if an individual) or any owner of the Applicant 1) been convicted; 2) pleaded guilty; 3) pleaded nolo contendere; 4) been placed on pretrial diversion; or 5) been placed on any form of parole or probation (including probation before judgment)?

So, if a person, in the last 5 years, has been convicted or has a record for a felony, they will be automatically disqualified from receiving this financial assistance.

It is important to contact an attorney if you believe that your criminal history or current criminal charge could prevent you from receiving assistance through the PPP.  This is information only and is not legal advice.  Contact an attorney in your state to help evaluate your personal situation.