Senators Tell SBA to Make Loans Accessible to People “Impacted by Criminal Justice System”

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Senator Ben Cardin, Chairman of the Senate Small Business and Entrepreneurship Committee, and Senator Cory Booker, Senior Member of the Small Business Committee, have urged the Small Business Administration (SBA) to make loans accessible to entrepreneurs with criminal records.

Senators urge SBA to provide more access to loans

In a letter to SBA Administrator Isabella Casillas Guzman, the two senators urged the SBA to make its core loan programs and business development services more accessible to entrepreneurs affected by the criminal justice system.

The letter follows a hearing Cardin convened last month to examine how the federal government can harness the power of entrepreneurship to help successfully return citizens and those affected by the justice system to their communities.

Specifically, the senators are asking the SBA to:

  • Open the 7(a) and 504 loan programs to those with criminal records similar to the recent changes to the Community Advantage program.
  • Assessing the Impact of the “Good Character” Criteria for Participation in SBA Loan and Contracting Programs on Justice-Affected Entrepreneurs
  • Direct the Office of Business Development to create specific programming for justice-affected entrepreneurs that is available in each state

“Given the critical importance of entrepreneurship to justice-affected and returning citizens, it is important that we ensure they have access to SBA programs. Opening these programs aligns with the mission of the SBA to ‘help, advise and assist’ small businesses, and aligns with the agency’s long-standing focus on reaching underserved entrepreneurs,” the senators said in the letter.

Why senators are asking for more opportunities for ex-convicts

The US prison population has grown by more than 450% over the past fifty years, with two million people currently incarcerated in federal and local prisons. Between 70 and 100 million Americans or up to one in three Americans have had involvement with the justice system, with people of color overrepresented in these statistics.

Each year, 600,000 people return to their communities from prison; two-thirds of whom are rearrested within three years and about half are re-incarcerated. One of the biggest challenges people face when they rejoin society is finding stable employment when they are released. Around 27% of ex-convicts are unemployed, nine times more than the national average.

As for ex-convicts in business, the senators cited research where only 18.61% of returning citizens started their own businesses, compared to 11.48% of those with no criminal record. In addition, up to 1.7% of employees in the American workforce are affiliated with companies owned by someone with a criminal record.

The research also found that returning citizen entrepreneurs earned 11.4% more per hour compared to returning citizens with a traditional job and that entrepreneurship reduces the likelihood of recidivism by 5.3%. This is a recidivism rate 32.5% lower than the rate of citizens who return to a traditional job.

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