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"An arrest is not a conviction."

One of the key aims of the CARES Act is to help small businesses obtain loans in response to the COVID-19 pandemic. The pandemic has caused many small businesses to lay off employees, cut expenses, and make other adjustments to hopefully avoid having to shut down completely.

According to the Marshall Project, there’s a major hitch in the law for anyone who has a criminal record, even if those charges were dismissed through a diversion program. The Small Business Administration (SBA), which is drafting regulations to implement the new law, generally forbids small-business owners from obtaining loans if they have a criminal record.

The Collateral Consequences Resource Center, a nonpartisan nonprofit that reviews how laws affect people with criminal records states “We have never seen such a sweeping mandatory disqualification based on a criminal record, in any area of the law,” According to the SBA, many people with criminal records start their own businesses because it’s the only way they can earn a living. Employers don’t like to hire workers with criminal records, especially if they have a felony conviction.

The SBA hasn’t responded to inquiries from the Marshall Project about how the general prohibition about extending loans to business owners with criminal records will apply to loans through the CARES Act. The current economic difficulties due to the COVID-19 crisis make it more urgent to extend loans to those in need – than ever before – without additional red tape.

Generally, the CARES Act has two types of loans for companies that hire 500 or fewer workers:

  • The Paycheck Protection Program – so businesses can keep paying employees during the COVID-19 crisis. The SBA loan policy appears to state that owners can’t get a loan if there are current criminal charges or if they’ve been convicted of a felony in the last five years. The application form asks, for the same look back period, whether the owner has:
    • Pleaded “no contest” to a criminal charge
    • Been placed in a diversion program.
    • Been on probation or parole due to a felony conviction.
  • An expansion of loans to business affected by the coronavirus crisis. This program isn’t clear as to what criminal records could disqualify a person from obtaining a loan – which is why the Marshall Project asked for more information.

What if my charges were dismissed in a diversion program?

Diversion programs are often very helpful, and are often among the options to be seriously considered in fighting your criminal charges. However, many defendants and even criminal defense lawyers and employees of diversion programs are not fully aware of the dangerous collateral consequences of participation in these programs. As the SBA regulations appear to indicate, acceptance into a diversion program may disqualify a defendant from obtaining an SBA loan.

How do diversion programs work?

South Carolina has different types of diversion programs for different criminal charges such as:

  • Some drug offenses
  • Pretrial intervention programs for first-time, nonviolent offenders
  • Underage drinking
  • Bad check offenses
  • Traffic tickets

The charges are essentially placed on hold if a defendant is accepted into a diversion program. The defendant is required to stay out of further trouble during the period they are on the program. They may also be required to:

  • Pass random drug tests
  • Perform community service
  • Attend therapy for any underlying problems
  • Pay restitution for any damages

Once the defendant has completed the requirements of the diversion program, the charges may be dropped.

Alternatives to diversion programs

At the Law Offices of A. Randolph Hough, P.A., attorney Hough works to have charges dismissed because evidence was illegally obtained or for many other legal reasons. He works to obtain acquittals where there are viable defenses. He also works to have criminal records expunged and to obtain pardons where possible.

Attorney Randolph Hough understands both sides of the criminal justice system in South Carolina. He served as a prosecutor for the Fifth Judicial Circuit of South Carolina. He also worked as a Special Assistant US Attorney. He’s handled thousands of criminal defense cases including thousands of DUI defense cases. For help with any criminal charge and understanding the full consequences of every criminal resolution of a case, call The Law Offices of A. Randolph Hough, P.A. at (803) 771-4119 or fill out my contact form. We have offices in Columbia and Charleston, South Carolina.

 

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