The Small Business Administration has adopted all of our suggested changes to a new rule for small business owners that will increase racial equity in the administration of SBA loans. 

Last year, the Washington Lawyers’ Committee, along with the Collateral Consequences Resource Center, drafted comments on a new proposed rule for the Small Business Administration (SBA). On August 5, 2022, 24 additional organizations signed on to the comment. The proposed rule certifies which veteran-owned small businesses can compete for loans, specifically set-aside federal contracts. However, the original proposed rule contained the “good character” standard for evaluating small business owners with arrest and conviction records, which appears in many other SBA programs. This “good character” standard is vague, ripe for the injection of racial bias, administered in a black-box fashion, and has no defined criteria for implementation. 

At the Committee, we have launched an overall effort to root out the use of this standard, and our comment called for the removal of an across-the-board ban on anyone who is on probation, on parole, or is incarcerated from being certified. 

This is victory is a critical first step in changing SBA standards for assessing small business owners with arrest and conviction records.