Category: Types of Consequences

Minnesota enacts four major record reforms in 2023

Thanks to a series of criminal-justice reforms enacted earlier this year, Minnesota has burnished its reputation as a national leader in reintegration and criminal record reform.  In a year in which there have been far fewer criminal record reforms than in the recent past, Minnesota’s performance stands out for the variety and breadth of relief granted, in many cases automatically. Here are the four major new laws: Expungement was made automatic for both non-convictions and a range of conviction records, effective January 1, 2025 The pardon process was entirely overhauled to make this relief more available, and expungement for pardoned convictions was made automatic Felony disenfranchisement was limited to periods of actual incarceration A law legalizing adult possession of cannabis made expungement automatic for a broad range of cannabis convictions. These four major new authorities are described below. We expect that the Minnesota legislature’s exemplary performance in enacting these important new provisions will be in for further recognition in our annual round-up of new record reforms.

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SBA takes one step toward fair chance lending, but needs to take another

The U.S. Small Bujsiness Administration has taken several recent steps that promise to make federally guaranteed loans available to business owners with a criminal history. This is an important policy issue we’ve been following for several years, and it appears there may at last be a breakthrough. How big a breakthrough remains to be seen. Following up on its omission of “character” and “reputation” as criteria for 7(a) loans, discussed in this post, the U.S. Small Business Administration issued new Standard Operating Procedures (SOP) for its 7(a) small business loan program. Effective August 1, 2023, the new SOP omits all mention of “good character” as a requirement for loan qualification. This means that applicants with a criminal history who apply to a bank for a federally guaranteed loan will no longer be put through the SBA’s onerous “character determination” process. (Applicants on parole or probation, or in prison, remain ineligible to apply under 13 CFR 120.110(n).) At the same time, the issue of prior criminal history appears to remain relevant in deciding whether to make a loan, since applicants for 7(a) loans (including Community Advantage loans) must still complete Form 912, which contains very broad questions asking about an applicant’s…

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SBA modifies criminal history restrictions in its loan programs

We have written at length about the broad criminal history restrictions imposed by the U.S. Small Business Administration in its business loan and disaster assistance programs. These restrictions, which first came to the public’s attention during the pandemic, have limited the availability of federally guaranteed bank loans to small businesses in developing communities, and stymied efforts to close the racial wealth gap through minority entrepreneurship. The SBA’s restrictive lending policies have never been justified by empirical evidence linking criminal history and creditworthiness, and may raise issues under the federal Equal Credit Opportunity Act.  It now appears that those policies are under review within the agency. Several weeks ago we reported on the SBA’s proposal to amend its rules on lending criteria to eliminate language that the agency has relied on for many years to support policies restricting federally guaranteed loans based on a business owner’s criminal history. In commenting on the proposed rule, we expressed the hope that this rule change would augur and end to the SBA’s consideration of  criminal history as an independent basis for denying credit. The SBA’s proposed amendment became final on April 10. While we remain guardedly optimistic that the new rule will have the…

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Pending federal reforms promise support for justice-affected entrepreneurs

Word is getting around about pending reforms that would make federal support for small businesses more widely available to entrepreneurs with a criminal history. Notably, the U.S. Small Business Administration has recently taken steps to reduce or remove entirely criminal record-related restrictions in its loan and contracting programs.  These are steps that CCRC has been urging ever since the SBA’s restrictive policies first came to public attention during the pandemic. An article by Michael Friedrich published today by Arnold Ventures (AV) describes a number of reforms recently proposed or adopted by the SBA that will eliminate arbitrary program barriers based on criminal history that are unrelated to any established risk. These reforms should encourage more justice-affected business owners to seek SBA support for their entrepreneurial ventures in the form of federally guaranteed loans or federal contract set-asides for “socially and economically disadvantaged” businesses. The AV article points out that the near-exclusion from these programs based on criminal history “frustrate[s] federal efforts to contribute to economic development in disadvantaged communities, often the same low-income communities of color that have suffered the most during the era of mass incarceration and tough-on-crime policies.”    

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SBA proposes to ease criminal history restrictions in loan programs

On October 23, 2022, the U.S. Small Business Administration published for comment a rule that would significantly expand the availability of federally guaranteed loans to entrepreneurs with a criminal history. This rule, if finalized, could also transform the SBA’s role in support of urban community development. The proposed rule, titled ”Affiliation and Lending Criteria for the SBA Business Loan Programs,” 87 FR 64724 (Oct. 23, 2022), eliminates language in the SBA’s formal lending criteria that the agency has relied on for many years to restrict loans to justice-affected business owners. We have written at length over the past several years about the broad record-based restrictions in the SBA’s lending and contracting programs, restrictions that first became controversial during the pandemic, and that have never been justified by evidence of a link between criminal history and credit risk. While the proposed SBA rule covers a variety of subjects, its key provision from CCRC’s perspective is its omission of the words “character” and “reputation” from the criteria for small business loans in 13 CFR 120.150(a). It is this language that has been relied on for the “good character” policies in the SBA’s operating procedures affecting both business loans and disaster assistance. In…

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