A Maryland storeowner sued the Small Business Administration, alleging the agency exceeded its statutory authority when it decided to limit the availability of pandemic relief loans to business owners with a criminal record.
The lawsuit was filed by the New Civil Liberties Alliance on behalf of Altimont Mark Wilks, who was barred from receiving a Paycheck Protection Program loan due to being on probation stemming from a 2004 felony conviction. The PPP, established in the CARES Act (Public Law 116-136), has facilitated hundreds of billions in government-backed forgivable loans intended to keep small businesses afloat during the coronavirus pandemic.
The lawsuit, filed Wednesday in the U.S. District Court for the District of Maryland, challenged an April interim final rule that declared a business ineligible for a loan if one of its owners was incarcerated, on probation, on parole, under an indictment, or had been convicted of a felony in the past five years. The lawsuit alleged those requirements went beyond the authority Congress granted the SBA in the pandemic relief law.
“Congress passed the CARES Act to help entrepreneurs like Mr. Wilks and did not grant SBA bureaucrats the power to arbitrarily prevent him from obtaining this critical financial assistance,” Jessica Thompson, a litigation counsel for the NCLA, said in an email statement.
Treasury Secretary Steven Mnuchin, during a Wednesday appearance on Capitol Hill, suggested that the Trump Administration is open to changing eligibility requirements for felons or those convicted of a felony in the last five years.
“If there’s bipartisan support we’re happy to make the change this week,” said Mnuchin. “We want to work with you and others to fix this and fix this really quickly.”
“We think the SBA’s role here is unlawful and just bad policy,” said Jared McClain, a staff attorney at the New Civil Liberties Alliance who is assisting Wilks. “The frustrating thing is not only they are hurting the small business owners who have a criminal history, but the employees of those businesses as well.”
The SBA didn’t immediately respond to requests for comment.
The case is Carmen’s Corner Store v. Small Bus. Admin., D. Md., No. 1:20-cv-1736, 6/10/20.
—With assistance from Colin Wilhelm.