Assisting Small Businesses Not Fraudsters Act
The Assisting Small Businesses Not Fraudsters Act would add a new prohibition to the Small Business Act. It would prevent SBA financial assistance from going to a small business concern if any of its associates has been finally convicted of financial misconduct or making a false statement related to a covered SBA loan or grant. In addition, a small business concern would be ineligible for SBA assistance if it has an associate who fits that conviction standard. The bill defines who counts as an “associate,” which loans or grants count as “covered,” and what “finally convicted” means. There is an exception for certain SBA support under section 7(b), and the prohibition would not apply to contracts entered into before the bill's enactment. The overall aim is to shield SBA programs from fraud and ensure integrity in federal small-business funding.
Key Points
- 1Financial assistance prohibition: An associate of a small business that is finally convicted of financial misconduct or a false statement related to a covered loan or grant cannot receive SBA financial assistance, with an exception for certain 7(b) assistance.
- 2Scope to the business: A small business concern is ineligible for SBA financial assistance if an associate meeting the above criteria is connected to the firm.
- 3Definition of associate: Includes officers, directors, or owners with more than 20% equity, key employees, entities at least 20% owned or controlled by such individuals, and any other individual or entity in control of or controlled by the small business (with specific carve-outs, e.g., licensed SBICs are excluded).
- 4Covered loans or grants: Includes certain SBA 7(a) loans (specific paragraphs) and 7(b) COVID-19-related loans, as well as certain grants under ARPA and the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.
- 5Finally convicted and timing: “Finally convicted” means a conviction that is no longer appealable or has completed the appeals process; the rule does not apply to contracts entered into before enactment.