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Financial Services Law Insights and Observations

SBA again revises PPP rules on felony convictions

Federal Issues Agency Rule-Making & Guidance SBA Small Business Lending Covid-19

Federal Issues

On June 26, the SBA made effective an interim final rule, which revises, for the second time, the eligibility requirements for the Paycheck Protection Program (PPP) related to felony convictions of applicants or owners of applicants. As previously covered by InfoBytes, on June 12, the SBA reduced the look-back period from five years to one year for any felony conviction that does not involve fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance of any owner of 20 percent or more of the equity in the applicant. The new interim final rule specifies two additional modifications that would render an applicant ineligible for a PPP loan: (i) if a 20 percent owner is presently subject to pending criminal charges for felony offenses (as opposed to any formal criminal charges); and (ii) if a 20 percent owner is on probation or parole that commenced within the one- or five-year time frames, as applicable, for the convictions outlined above.

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