HR825-119

What This Bill Does

The Assisting Small Businesses Not Fraudsters Act amends section 16 of the Small Business Act. An associate of a small business concern who is finally convicted of a crime involving financial misconduct or a false statement tied to a covered loan or grant becomes ineligible for SBA financial assistance, except for disaster loans under section 7(b). A small business concern with such an associate is also ineligible for SBA financial assistance, again except for section 7(b) disaster loans. The rule does not apply to federal contracts or agreements entered before enactment.

The bill defines associate broadly to include an officer, director, owner of more than 20 percent of the equity, key employee, an entity at least 20 percent owned or controlled by those people, and any other person or entity controlling or controlled by the small business concern, while excluding licensed small business investment companies. Covered loans and grants include PPP loans, second-draw PPP loans, COVID-19 EIDL assistance, Restaurant Revitalization Fund grants, and Shuttered Venue Operators Grants. A person is finally convicted once appeal time expires without appeal or the appeals process is completed.

Who Benefits and How

Legitimate small business applicants, SBA loan officers, SBA grant administrators, SBA Office of Inspector General investigators, federal taxpayers, PPP program-integrity staff, EIDL program-integrity staff, Restaurant Revitalization Fund oversight staff, and Shuttered Venue Operators Grant oversight staff benefit because repeat fraud risks are excluded from most future SBA assistance and program funds are less likely to be diverted to people already finally convicted of covered misconduct.

Who Bears the Burden and How

PPP fraud convicts, COVID EIDL fraud convicts, Restaurant Revitalization Fund fraud convicts, Shuttered Venue Operators Grant fraud convicts, small businesses with convicted associates, officers with covered convictions, directors with covered convictions, more-than-20-percent owners with covered convictions, key employees with covered convictions, and entities controlled by convicted associates are barred from most SBA financial assistance and become ineligible for future SBA loans or grants outside the disaster-loan exception.

Key Provisions

• Bars associates finally convicted of covered loan or grant fraud from most SBA financial assistance.
• Bars small business concerns associated with those convicted individuals from most SBA financial assistance.
• Preserves eligibility for section 7(b) SBA disaster loans.
• Defines associate to include officers, directors, more-than-20-percent owners, key employees, controlled entities, and controlling persons.
• Covers PPP, second-draw PPP, COVID EIDL, Restaurant Revitalization Fund, and Shuttered Venue Operators Grant fraud.
• Defines final conviction by completion or expiration of the appeals process.
• Protects federal contracts and agreements entered before enactment.