Technical corrections only. The v3 version reflects the bill's referral to the Senate after passing the House, with updated legislative status information. No substantive policy changes were made to the bill's text.
Assisting Small Businesses Not Fraudsters Act
- Sponsor
- Rep. Williams, Roger [R-TX-25]
- Committees
- Small Business Committee (primary)
- Last action
- Feb 25, 2025
Bottom line
The bill aims to prevent individuals and businesses convicted of defrauding specific COVID-19 relief programs from accessing future non-disaster SBA financial assistance.
What it actually does
This bill amends the Small Business Act to prohibit individuals who have been finally convicted of financial misconduct or making false statements related to specific COVID-19 relief loans or grants from receiving most types of financial assistance from the Small Business Administration (SBA). It also extends this prohibition to small business concerns that have such an individual as an 'associate.' The prohibition does not apply to general SBA disaster loans under Section 7(b) and is not retroactive for agreements entered into before the bill's enactment.
Proponents argue
Proponents argue that this bill is a necessary measure to protect taxpayer money and ensure that federal assistance programs are not exploited by fraudsters. They contend that individuals who have demonstrated a willingness to defraud the government, particularly during a national crisis like the COVID-19 pandemic, should be permanently barred from receiving future public funds, thereby upholding the integrity of the SBA's programs and deterring future misconduct.
Opponents contend
Opponents might argue that while preventing fraud is important, the bill's scope might be too narrow or too broad in certain aspects. Some might contend that the exception for general 7(b) disaster loans creates an inconsistent standard, allowing fraudsters to still access some federal assistance. Others might raise concerns about the administrative burden on the SBA to track and enforce these prohibitions, or question if the focus solely on COVID-19 related fraud is sufficient, rather than a broader prohibition for all government fraud.
The bill is very short and clear, making it highly accessible for readers to understand its core provisions quickly.
Section 2(a), adding 15 U.S.C. 645(h)(1)
Prohibition for Convicted Individuals
This provision makes an individual ineligible for most Small Business Administration (SBA) financial assistance if they are an 'associate' of a small business concern and have been 'finally convicted' of a crime involving financial misconduct or a false statement related to specific COVID-19 relief loans or grants. The only exception is for financial assistance provided under Section 7(b) of the Small Business Act, which typically covers disaster loans.
Supporters argue
Supporters argue this directly targets individuals who have abused federal programs, ensuring they cannot benefit from future taxpayer-funded assistance, thereby restoring public trust and deterring similar crimes.
Critics contend
Critics might question the specific carve-out for Section 7(b) disaster loans, arguing that a conviction for fraud should lead to a broader exclusion from all federal assistance, regardless of the program type.
Tradeoffs
The provision balances the desire to punish and deter fraud with the potential need for individuals to access disaster relief in times of crisis, even if they have a past conviction for non-disaster related fraud.
Section 2(a), adding 15 U.S.C. 645(h)(2)
Prohibition for Business Concerns with Convicted Associates
This provision extends the ineligibility for most SBA financial assistance to any small business concern that has an 'associate' (such as an officer, director, or significant owner) who is subject to the prohibition described above. This means a business cannot receive assistance if a key person within it has been convicted of the specified fraud, with the same exception for Section 7(b) disaster loans.
Section 2(a), adding 15 U.S.C. 645(h)(3)
Definitions of Key Terms
This section defines critical terms used in the new prohibition. An 'associate' includes officers, directors, owners of more than 20% equity, key employees, and entities controlled by such individuals. A 'covered loan or grant' specifically refers to COVID-19 pandemic relief programs, including certain Section 7(a) loans (like PPP), COVID-specific Section 7(b) loans (like EIDL), and grants like SVOG and RRF. 'Finally convicted' means a conviction where all appeals are exhausted or the time for appeal has expired.
The bill prohibits individuals and businesses convicted of fraud related to 'covered loans or grants' from receiving 'any financial assistance from the Administrator, other than financial assistance under section 7(b).' However, 'covered loan or grant' *includes* a loan made under 'subsection (b) of such section in response to the COVID-19 pandemic.' This means a conviction for defrauding a COVID-19 specific 7(b) loan would make one ineligible for *future non-7(b)* SBA assistance, but not necessarily for *future non-COVID-19 7(b)* disaster assistance.
Section 2(a), adding 15 U.S.C. 645(h)(1) and (2) in conjunction with (h)(3)(B)
Why it matters:This is likely a deliberate legislative choice to balance the desire to punish fraud with the need to ensure individuals and businesses can still access critical disaster relief, even if they have a past fraud conviction unrelated to a current disaster. It's a technical distinction that reflects a policy decision.
Case for: Proponents would argue this distinction is pragmatic, ensuring that individuals or businesses, even with a past fraud conviction, are not completely cut off from essential disaster relief during emergencies, which could have broader societal impacts. It allows for a targeted prohibition while maintaining a safety net for genuine disaster needs.
Case against: Critics might contend that any conviction for defrauding a federal program, including a COVID-19 related disaster loan, should lead to a complete ban from all future SBA assistance, including non-COVID-19 disaster loans. They might argue that this carve-out weakens the bill's overall deterrent effect and sends a mixed message about the seriousness of defrauding government programs.
Estimated impact: This provision ensures that individuals and businesses convicted of COVID-19 relief fraud retain eligibility for future, non-COVID-19 specific disaster assistance under Section 7(b), potentially affecting a small number of future disaster loan applicants.