Six weeks after the Paycheck Protection Program began pumping hundreds of billions of dollars in lifelines to businesses affected by shutdowns, one group of entrepreneurs remains frozen out of resources: those who have previous criminal history.
The Small Business Administration’s decision to exclude these members of our community from the payroll loans has caused great harm — damage that will linger long after the pandemic, resulting in long-term economic damage to our communities and greater recidivism.
The bill passed by Congress and signed by President Trump to establish the Paycheck Protection Program — the Coronavirus Aid, Relief and Economic Security Act — wisely did not include language blocking loans for people who had paid their debt to society. Rather, the S.B.A. created the exclusion on its own, for reasons it has not explained.
Justice reform and pro-business groups, including the American Enterprise Institute and the Brennan Center for Justice, and senators in both parties have criticized the glaring unfairness of this exclusion. It’s an obvious affront to human dignity and social justice when large corporations can receive millions of dollars in small business loans while a group of actual small business owners in dire need of a helping hand — expressly to retain and pay their workers — can’t receive a dime.
With this rule, our federal government is telling these “second chance entrepreneurs” that the value they bring to their communities, their employees and to our nation as a whole does not matter and is not worth saving.
Beyond the fundamental unfairness, this arbitrary exclusion makes no economic sense. Today, unemployment in the United States hovers near Great Depression levels, with more than 40 million people filing new claims over the past two months. But even before the pandemic, individuals re-entering society from prison were unemployed at a rate of over 27 percent — higher than the total domestic unemployment rate during any historical period, including the 1930s, according to a 2018 study by the Prison Policy Initiative.
The S.B.A.’s choice to block formerly incarcerated small business owners from access to funds not only compounds this structural problem, it also increases the economic vulnerability of their employees, families and neighbors.
The rule should be reversed. Doing so would enable vital investments in the neighborhoods that house such small businesses. It would begin to address the pre-existing racial disparities in access to funds that have been exacerbated by the program. And, of equal importance to law enforcement offices like mine, it would enhance public safety by keeping more New Yorkers employed and by ensuring that a number of our restaurants, barbershops and bodegas — the eyes, ears and soul of our neighborhoods — wouldn’t have to shutter permanently.
At the Manhattan district attorney’s office, we hire re-entering New Yorkers and provide full funding for New York’s first statewide college-in-prison program. Through our Criminal Justice Investment Initiative, we use funds forfeited in our investigations against major banks to create employment opportunities and career training for re-entering New Yorkers and at-risk youth. Among other social enterprises, we invest in Drive Change — a nonprofit that operates food trucks where 18- to 25-year-olds who were formerly incarcerated receive culinary arts training and business skills.
This is how we break the cycle of recidivism in Manhattan: We invest in jobs for re-entering individuals to advance both public safety and justice in our society.
The Small Business Administration does not set criminal justice policy, and it should not stand in the way of second chances — a central plank of Mr. Trump’s criminal justice platform. Nor should it lay the groundwork for increased recidivism.
In order to forge a more just and safer union from the ashes of our current devastation and suffering, we call upon Treasury Secretary Steven Mnuchin to make small business funds available to formerly incarcerated Americans. If he does not, then Congress must act to reverse this arbitrary exclusion in its next relief bill.
Cyrus R. Vance is the Manhattan district attorney.
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