Changes to PPP Eligibility and Criminal History

Editor’s note: On February 22, President Biden announced changes to the Paycheck Protection Program which we cover in our short video below.

When the PPP was first released, there were strict rules surrounding criminal history. After facing criticism, changes were made to make the program more widely available. If you’re interested in applying for a PPP but an owner in the business with a criminal history may be affected by these rules, here’s what’s changed.

Will my business be reviewed for criminal history?

Any owners with 20% or more equity in the company must be listed on your PPP application and will have their background checked for any criminal history. A business will be immediately ineligible if any listed owners are currently incarcerated, on probation, on parole, or have any current fraud related formal criminal charges. If a business owner or part owner has a prior criminal record which is unrelated to fraud, your business is still eligible to apply.

Misdemeanors and infractions will generally not affect eligibility for a PPP loan unless those charges are related to fraud, bribery, embezzlement, or a false statement in a loan application.

To be able to apply for a PPP loan, all owners must agree to allow the SBA to request criminal record information from criminal justice agencies for the purpose of determining eligibility.

How far back will the SBA look into my criminal history?

Under the old rules, applicants would have their previous five years reviewed for any felonies.

With the change that took place on June 12, applicants will now only have the previous year reviewed. The exception is for convictions of a felony involving fraud, bribery, embezzlement, or a false statement in a loan application. If an owner was convicted of any of those crimes in the previous five years, the business would be ineligible for a PPP loan.

I’m now eligible for a PPP loan, how do I apply?

You can review our list of lenders currently accepting applications which includes local banks and FinTech lenders like BlueVine or Lendio. Starting to collect the necessary documents now will make filling out an online application quick and easy.

More PPP resources

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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