Assisting Small Businesses Not Fraudsters Act
The Assisting Small Businesses Not Fraudsters Act would add a new provision to the Small Business Act to bar SBA financial assistance for associates of a small business concern who are finally convicted of financial misconduct or making false statements related to a covered loan or grant. In practice, this means if an officer, owner, key employee, or other control person of a business (or entities they control) is convicted, the business could be ineligible for most SBA financial programs, with certain exceptions. The bill defines who counts as an “associate,” what counts as a “covered loan or grant,” and what “finally convicted” means, and it clarifies that the prohibition does not apply to contracts or agreements entered into before the enactment date. Some SBA programs (under section 7(b)) would be exempt from the prohibition.
Key Points
- 1Ineligibility for SBA financial assistance: An associate of a small business concern who is finally convicted of financial misconduct or a false statement related to a covered loan or grant renders the associate ineligible for SBA financial assistance, with an exception for financial assistance under section 7(b).
- 2Scope for the business concern: A small business concern with such an associate becomes ineligible for any SBA financial assistance (other than 7(b)).
- 3Definitions:
- 4- Associate: Includes officers, directors, or owners with more than 20% equity, certain entities owned or controlled by these individuals, and other individuals or entities that control the business (excluding licensed SBICs).
- 5- Covered loan or grant: Includes specific COVID-19 related loan programs and certain ARPA/EHA grants.
- 6- Finally convicted: Conviction that is final either because the time for appeal has expired or the appeals process is completed.
- 7Applicability: The prohibition does not apply to contracts or other government agreements entered into before the enactment date.
- 8Practical effect: The measure is designed to reduce risk to taxpayers by blocking SBA support from entities tied to individuals with a record of financial misconduct or fraud related to government aid.