Jenner & Block

SBA Lawsuit Ends in Victory for Business Owners with Criminal Records Seeking COVID-19 Relief Loans

In June, the firm joined the ACLU, the Public Interest Law Center, and Washington Lawyers’ Committee for Civil Rights and Urban Affairs in seeking an injunction against a Small Business Administration rule that excluded business owners with felony convictions from securing loans from the Paycheck Protection Program, which is aimed at helping small businesses struggling with the impact of the coronavirus pandemic.  On June 24, in response to the suit, the SBA expanded the eligibility for federal PPP loans to include a broader number of small business owners with criminal records.

On June 30, a federal court declared the SBA’s challenged and rescinded restrictions had been unjustified and illegal because they arbitrarily excluded people with past criminal records from aid. “This decision has the potential to impact future small business aid programs and ensure all persons with criminal records are not excluded,” according to a press release.

The plaintiffs include a nonprofit organization that works with formerly incarcerated people to provide them training and support; a Black majority owner of graphic design business and advocate for the formerly incarcerated; and a Black small business owner who owns and operates a small electrical contracting business. The court granted relief to the firm’s individual clients by ordering the SBA to set aside funds for them and to extend the application period for them so that they could secure loans they should have had access to all along. 

With Congress’s extension of the PPP application period, small business owners newly eligible for funding because of the lawsuit will now be able to broadly apply for the emergency relief funds.

The firm team includes Partner Kali Bracey, Associates Elizabeth B. Deutsch and Jacob D. Alderdice, Senior Paralegal Cheryl Olson and Associate Manager of Docketing Services Tyler Edwards.  The team was supported by Partners Damon Y. Smith and Matthew E. Price and Associates Isabel F. Farhi, Andrew Whinery, and Grace Wallack.