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Ex-con business owners denied COVID relief despite efforts to make record expungement easier

May 19, 2020 by G.W. Schulz

Past convictions are standing in the way of critical pandemic aid to small businesses

An estimated one in three Americans have some sort of criminal record. Vincent Bragg is one of them. In 2001, he was convicted of running a multimillion-dollar drug empire and spent five years in prison for it. After he was released, he wanted to turn his life around, so he did what many Americans do: he started his own business.

Bragg launched his advertising and creative agency while he was still behind bars called ConCreates fueled by the ideas of current and former prison inmates. He is a success story of reform.

“I was told by a man in prison that I ran my drug business like a Fortune 500 company, but my product was illegal,” Bragg told Adweek last year. “ … I think the biggest mistake I’ve made in my career is just not realizing my potential sooner.”

Bragg’s success seemed like a foregone conclusion, but then the Pandemic happened. Bragg, like millions of other small business owners, was desperately trying to keep his dream alive, so he turned to the relief fund Congress created during the crisis to help entrepreneurs like him.

Congress passed the mammoth Payroll Protection Program during the pandemic to help America’s small businesses pay their rent and utilities and keep their employees receiving paychecks.

“We’ve been inundated from the very beginning of this by calls from small businesses. They’ve been suffering every hour,” Republican Sen. Jim Inhofe of Oklahoma said after marathon negotiations in Congress to pass the first major relief package. “They want to protect their employees and ensure that this unprecedented disaster isn’t going to take their business or employees away.”

Hoping to keep his own small business in Los Angeles with nine employees afloat, Bragg applied for aid. His application was denied by the Small Business Administration because of his criminal record and he’s far from the only one.

A woman and her husband in Arizona were denied because the husband was on probation for a minor theft charge. A former felon in Houston who owns a landscaping business with eight employees was denied both payroll protection and emergency disaster loans.

When Congress announced that it was pumping billions of dollars into the economy, in part to help keep small businesses from failing, many people with criminal histories quickly learned they were ineligible. But the federal government has been anything but clear about precisely who is ineligible.

The nonprofit Collateral Consequences Resource Center reports that applicants are immediately disqualified if anyone owning 20 percent or more of the company was convicted of any felony in the last five years (including nonviolent drug offenses). Also barred are “any owner” of the business who was placed on probation or pretrial diversion, pled guilty, or was convicted of any felony in the last five years.

That’s not all. The Small Business Administration has longer-standing administrative rules that restrict applicants where any partner of the business has been indicted for a “crime of moral turpitude.” The policy further requires that owners of the business “be of good character.”

“It is not in the public interest for the [Small Business Administration] to extend financial assistance to persons who are not of good character,” the agency advises its personnel.

Former prison inmates often create small businesses due to the fact that they can’t find employment elsewhere with criminal records. But the Prison Entrepreneurship Program, created to help former inmates build small businesses, says none of its graduates have reported receiving stimulus assistance from the government during the COVID outbreak.

That’s out of 500 small businesses created as part of the program. “Guys either got denied or never heard back,” the nonprofit’s CEO said recently.

President Trump has seemed largely unaware of the provision when asked about it during press briefings. “I’d like to look into that,” he told one reporter last month. As far as anyone knows, it never happened.

Meanwhile, criminal justice reformers from across the political spectrum have been calling upon Senate Majority Leader Mitch McConnell, House Speaker Nancy Pelosi, and the Small Business Administration to amend the policy as they negotiate possible new cash infusions.

Said one former convict who was denied aid for his small business: “You go and you pay your debt and you’re still paying your bill.”

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