Webinar November 10 at 1 EST
Generational Wealth: Credit Barriers for People with a Criminal History
Tune on Thursday Nov. 10 at 1 EST for a webinar hosted by the National Community Reinvestment Coalition on barriers to credit for small business owners with a criminal record. Panelists, including CCRC’s Margaret Love, will describe the many formal and informal restrictions on access to credit that make it difficult for an entrepreneur with a criminal record to build a business, including those imposed by the U.S. Small Business Administration on access to federally-guaranteed bank loans. These are issues that CCRC has been exploring since the early days of the pandemic when the SBA’s restrictions on the Paycheck Protection Program came to light.
- Margaret Love, Executive Director, Collateral Consequences Resource Center
- Lettisha Boyd, Owner and Principal Consultant, Beyond Savvy Consumers
- Bonnie Crockett, Director of Small Business Lending at Baltimore Community Lending Inc.
- Susan Grutza, Policy Counsel of the Office of Fair Lending & Equal Opportunity, Consumer Financial Protection Bureau
Register for the webinar here:
The NCRC’s announcement is here:
Nearly 1 in 3 Americans have a criminal record. Each year over 600,000 Americans are released from state or federal prisons and re-enter society. Re-entry into society poses barriers to everyone but disproportionately affects African Americans and other minorities as African Americans and Hispanics make up 56% of the incarcerated population. This disproportionate representation within the criminal justice system impacts these communities and their ability to build generational wealth due to the barriers that exist upon re-entry.
Join us on November 10th as we speak with advocates, a CDFI, and the CFPB about the barriers that exist for people with a criminal record to build wealth and what can be done to overcome these barriers.
In addition to its lending and other programs in support of small businesses, the U.S. Small Business Administration provides long-term low-interest loans under Section 7(b) of the Small Business Act directly to individuals, businesses, and nonprofits in declared disaster areas. The current devastation wrought by Hurricane Ian in Florida — the subject of a dedicated new page on the SBA’s website — reminded us of some research we published two years ago, at the height of the pandemic, about how people with a criminal record were faring under the SBA’s COVID-related disaster relief program. The answer initially was “not well.”
Our research indicates that neither FEMA (emergency aid) nor the USDA (farm loans) impose criminal record restrictions on disaster assistance. But the SBA does. What’s more, the SBA’s restrictions are not formalized in a regulation but buried in operating procedures.
The criminal history restrictions on SBA economic injury disaster loans (EIDL) under the CARES Act were initially even more restrictive than those that applied to its PPP relief, and they too were never formalized in a rule. The PPP restrictions were rolled back in response to public outcry and lawsuits, and the following year the COVID-related EIDL policy was also rolled back to disqualify the same limited population as the PPP itself (people in prison or on probation or parole, with pending felony charges, or with recent financial fraud and related convictions). However, criminal record restrictions in the SBA’s general non-COVID lending programs, including its general disaster assistance programs, were not affected.
Now that the SBA’s disaster assistance programs are no longer administered under the exceptional and well-publicized approach of the pandemic-related authorities, we thought it would be timely to take another look at how those programs — presumably including the one that specifically applies to Hurricane Ian relief — are available to people with a criminal record.
NOTE: On September 29, Governor Newsom signed into law both of the bills discussed in the post below. They will take effect on January 1, 2023.
California Governor Gavin Newsom is expected to sign this week two bills that will give that state the broadest record-clearing laws in the nation. Senate Bill 731 would extend both automatic and petition-based and record relief to felony-level offenses, while Senate Bill 1106 would preclude denial of relief based on outstanding court debt in most cases.
When signed into law, Senate Bill 731 will place California at the forefront of record clearing nationwide. It would expand automatic record relief to all felony non-convictions since January 1, 1973, six years after the date of arrest. California law currently excludes felony arrests from eligibility for automatic relief if the charge is serious enough to potentially result in incarceration at a state prison. Other felony non-convictions remain eligible for automatic relief after three years unless the charge was punishable by eight years’ incarceration or more in a county jail, for which the new six-year wait period applies.
SB 731 also expands eligibility for automatic relief to persons convicted of a felony and sentenced to probation on or after January 1, 2005, if they violated probation but later completed all terms of supervision. Current law excludes from relief anyone who violated their probation. The new law requires a four-year conviction-free period after completion of the sentence. This expansion of automatic relief does not apply to certain serious and violent felonies, and ones for which the person is required to register as a sex offender. As noted below, all but the last-mentioned category will now be eligible for relief by petition.
Numerous studies have demonstrated how Black Americans are treated more harshly at every stage of the criminal legal system—from over-policing to overcharging to more punitive sentencing. New research from California shows how eligibility limitations on criminal record relief perpetuate racial disparities in the criminal justice system, and have a disproportionately adverse effect on Black Americans.
The study, by Alyssa Mooney, Alissa Skog, and Amy Lerman, and published in Law & Society Review, examined recent legislative changes to criminal record relief laws in California, one of the first states to automate relief. The study assessed the equity of California’s existing automatic record relief laws by examining the share of people with criminal records who are presently eligible for automatic record clearing, and variations across racial and ethnic groups.
Reproduced below is a press release describing new research by three California scholars published in the Law & Society Review, based on California sentencing data, showing how eligibility criteria for automatic record clearing “can inadvertently perpetuate racial inequity within the criminal justice system.”
This conclusion seems to us unsurprising, and likely has broader national application for two interrelated reasons: Prosecution policies nationwide have tended to result in more Blacks than Whites being convicted of more serious felonies resulting in prison sentences, while eligibility for automatic record clearance has to date been authorized primarily for non-convictions and misdemeanors (see sections 2 and 3 from the 50-state charts at this link from our Restoration of Rights website: https://ccresourcecenter.org/state-restoration-profiles/50-state-comparisonjudicial-expungement-sealing-and-set-aside-2/.) The authors recommend that “to reduce the racial gap in criminal records, a change in policy needs to happen to extend record clearance eligibility to a wider range of cases—for example, people with felonies or those sent to prison who are currently excluded.”
The California legislature seems to have anticipated the recommendations in this report, for on August 18 it enrolled and sent to Governor Newsom’s desk a bill that would extend existing automatic record clearing authority to most felonies after four felony-free years, and for the first time to felony non-conviction records. See SB 731. This makes California’s “clean slate” law by far the most extensive in the country.
CCRC’s Board of Directors is delighted to announce that Rob Poggenklass has accepted its offer to serve as CCRC Deputy Director. Rob has served as a public defender and legal aid lawyer in Virginia and Iowa for more than a decade, and has the technical legal skills, the field experience, and the passion for the policy issues that make him an ideal fit for the position.
“I’m excited to join an organization dedicated to many issues I care so deeply about,” Rob told the CCRC board. “Everyone deserves a chance to live with dignity, and the effects of a criminal record often stand in the way. I have spent much of my career fighting against these barriers. I look forward to elevating these issues across the country at CCRC.”
We first met met Rob three years ago, when he was seeking amicus support for a cert petition to the U.S. Supreme Court in a case involving an Iowa woman who the state courts had ruled ineligible for record clearing because she could not pay the costs of the court-appointed lawyer who had represented her in her diversion case a decade before. CCRC was happy to file an amicus brief in support of Rob’s excellent petition, and while in the end the petition was not granted, Rob impressed us all then as a supremely talented and committed advocate.
We at CCRC are thrilled at our good fortune to have been able to lure Rob away from the client work that has engaged him for more than a decade. We will welcome him on board in September.
Here are some of Rob’s career highlights:
- Argued at two state supreme courts (Virginia, Iowa). Won a unanimous decision from the Iowa Supreme Court holding that a person could not be denied expungement of a non-conviction criminal record because of fines and fees owed in other cases.
- Produced 30 expungement and employment barriers clinics across the state while at Iowa Legal Aid.
- Organized and lobbied for passage of Virginia’s 2021 record sealing law, which will allow sealing of convictions in Virginia for the very first time when it takes effect in 2025. Wrote the Legal Aid Justice Center’s “know your rights” materials on the new law, as well as a comment for the CCRC website.
- Authored a report on the unparalleled power of Virginia’s commonwealth’s attorneys during a legal fellowship at the ACLU of Virginia.
- Represented hundreds of indigent clients in misdemeanor and felony cases as a public defender in Newport News, Va.
Over the past two years, CCRC has been studying the restrictions imposed by the U.S. Small Business Administration on loans to small businesses owned by justice-affected individuals. Many of those same restrictions, which are grounded in an operating policy that recipients of federal assistance have “good character,” also apply by formal rule in the SBA’s business development program under 8(a) of the Small Business Act.
For more than half a century, the so-called “8(a) program” has earmarked federal contracts for businesses owned by socially or economically disadvantaged individuals, and it has been a key driver of community development in urban areas. But the program’s “good character” test has historically excluded from participation many if not most business owned or managed by individuals with a criminal history. The 8(a) program also has satellite programs, including ones offering preferential treatment to businesses owned by women and veterans, though it is less clear whether these programs have similar criminal history restrictions.
Recently, Congress returned responsibility for certifying program eligibility for veteran-owned business from the VA to the SBA, and the SBA has now published proposed certification rules for public comment. These proposed rules offer a first chance to speak to the SBA’s “good character” requirement.
CCRC worked with the Washington Lawyer’s Committee for Civil Rights to draft comments on the proposed rule that are critical of the SBA’s vague and open-ended test of business owners’ “character” that results in disqualification of many deserving individuals from this and other federal programs administered by the SBA. Those comments, which are joined by 24 other organizations, were filed on August 5 and are available here.
We are pleased to republish a book review by CCRC Executive Director Margaret Love of a collection of essays about how European countries manage access to criminal records. The philosophy and values underpinning the EU approach revealed in these essays are so different from our own that their product will make record reformers in the U.S. green with envy.
For example, the review points out that one of the foundational premises of European systems of criminal records is that giving the public broad access would be “contrary to ‘fundamental’ considerations of privacy and human dignity protected by the European Convention on Human Rights, which implicitly limit loss of liberty and public stigmatization through disclosure of a past crime.” Accordingly, employers and other non-law enforcement entities can have access to criminal records only if their subject explicitly authorizes it, and even then a request will be permitted only in specified circumstances where a criminal record is deemed relevant.
Individuals asked to produce their record may decide that the uncertainty of benefit is not worth the risk of exposure. In this fashion, individuals may take responsibility for achieving their own social redemption even if they lose an economic opportunity.
Only a “dystopian account” of the Australian system of accessing criminal records will seem familiar to U.S. practitioners.
Here is the review by CCRC’s Margaret Love, which originally appeared in Criminal Law and Criminal Justice Books:
The Collateral Consequences Resource Center is seeking an enterprising and committed individual with strong technical skills to serve as its next Deputy Director. The incumbent will work with the Executive Director in all aspects of CCRC’s program, and will have primary responsibility for maintaining the Restoration of Rights Project (RRP), including its various derivative reports for which CCRC is best known. The RRP is a unique national inventory of laws and practices relating to criminal record relief and restoration of rights in each U.S. jurisdiction, which attracts thousands of visits to the CCRC website each day. Keeping the RRP current in real time requires strong research skills, patience and attention to detail in analyzing complex statutes, and a passion for issues relating to restoration of rights after arrest or conviction.
In producing the annual reports on new legislation and issue-specific analyses of current trends, the Deputy Director will have an incomparable opportunity to guide the development of public policy in this important emerging area of the law. The incumbent will be responsible for developing other aspects of CCRC’s work, and will have opportunities to publish scholarly articles and participate in academic conferences.
CCRC was established in 2014 to promote public engagement on the myriad issues raised by the collateral consequences of arrest or conviction. It provides technical assistance to advocates and lawmakers in support of state reform efforts, participates in court cases challenging specific collateral consequences, and collaborates with other organizations in reporting on such issues as court debt as a barrier to record clearing and exclusion of convicted individuals from jury service. In addition to maintaining the Restoration of Rights Project, CCRC provides technical assistance to advocates and lawmakers in support of state reform efforts, participates in court cases challenging specific collateral consequences, and collaborates with other organizations in reporting on such issues as court debt as a barrier to record clearing. Most recently, through its Fair Chance Lending Project, CCRC has advocated for the elimination of criminal record restrictions in federally guaranteed small business loans and federal contract set-aside programs.
A fuller description of CCRC’s work and of the Deputy Director position is here.
The CCRC Deputy Director is a full-time remote position and may be particularly attractive to individuals seeking a flexible work schedule. Compensation is negotiable depending on experience. An early start date is desirable, and a limited-term tenure may be possible.
TO APPLY: Submit the following materials to firstname.lastname@example.org
- Cover letter
- Writing sample
- List of three references
Applications will be accepted on a rolling basis until the position is filled.
This post is a part of CCRC’s Fair Chance Lending Project (FCLP), and was prepared by students from Yale Law School’s Community Economic Development Clinic, which is working with CCRC on the project. The FCLP promotes greater access to government-sponsored loans to justice-impacted small business owners and managers, particularly within the Small Business Administration loan guarantee programs. The post builds on briefing materials originally prepared by CCRC staff, including its former intern Jack Keating.
Applying for a USDA Loan with a Criminal Record
The United States Department of Agriculture offers a selection of guaranteed loan programs for farms and other small businesses in rural communities. While these USDA loan programs are broadly analogous to the Small Business Administration’s business loan guarantee programs, their eligibility requirements differ in at least one significant way: the USDA imposes no general criminal record restrictions on loan eligibility for justice-impacted individuals who own or manage small businesses. Instead, USDA imposes only narrow record-based restrictions that are specifically required by statute, and that are likely to apply to very few loan applicants. Because applicants for SBA loans are more likely to be racial or ethnic minorities than applicants for the USDA’s financial products, the disparate impact of the SBA’s uniquely stringent criminal background requirements is amplified
In this post, we describe the restrictions on lending to justice-impacted individuals within programs administered by the USDA, focusing mainly on the agency’s flagship Business & Industry Loan Guarantees Program. CCRC’s Fair Chance Lending Project is focused on advocating for changes to SBA lending policies, and we believe that other agencies’ practices may provide instructive alternative models that can guide the SBA as it modernizes its rules. Thus, in a final section we discuss the implications of USDA loan policies for those of the SBA.