The Paycheck Protection Program (PPP) has provided funds to small businesses to ease the economic effects of the coronavirus disease 2019 pandemic. However, the PPP did not initially disburse funds to companies owned by individuals with felony backgrounds. In this report, researchers estimate how many small businesses have owners with criminal history records and how many businesses were potentially affected by PPP restrictions.

Cover: Small Businesses, Criminal Histories, and the Paycheck Protection Program
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Small Businesses, Criminal Histories, and the Paycheck Protection Program

by Shawn D. Bushway, Dulani Woods, Denis Agniel, David M. Adamson

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Research Questions

  1. How many small businesses have owners with criminal history records?
  2. How many small businesses and small business employees were potentially prevented from accessing PPP aid because of PPP felony restrictions?
  3. How many small businesses and small business employees were potentially given access to PPP aid after the felony restriction revisions by the Biden administration in 2021?

The Paycheck Protection Program (PPP) has provided funds for payroll, rent, mortgage, and utilities to businesses with fewer than 500 employees to help ease the economic effects of the coronavirus disease 2019 pandemic. However, the PPP did not initially allow participation by companies owned by individuals with criminal backgrounds. The PPP's definition of criminal background included individuals with felony convictions in the past five years.

Following pushback from policymakers and advocacy groups, the Trump administration limited the five-year restrictions to certain felonies; for all other felonies, the restrictions were limited to a one-year window after conviction for those not incarcerated. In February 2021, the Biden administration further relaxed the PPP restrictions, removing the one-year window.

In this report, researchers estimate how many small businesses have owners with criminal history records and how many businesses were potentially affected by PPP restrictions. Researchers accessed information from a consumer and background check company, which collects and organizes data in a wide variety of domains and which links information from individual criminal history records with information about company ownership. This innovative use of commercially collected and indexed criminal history data generated national estimates of the prevalence of criminal history records in the United States.

Key Findings

  • Nearly 4 percent of all small businesses had owners with a criminal history, and about 1.5 percent of all small businesses had owners with a felony record.
  • An estimated 140,325 disqualifying felonies existed under the original PPP restrictions, and 212,655 small businesses had owners with a record of a felony in the last five years.
  • Under the revised 2021 PPP restrictions, the number of businesses affected dropped by 95 percent, to 11,481.
  • Under the original PPP restrictions, 343,198 employees were affected; this number was reduced by 95 percent, to 17,533, under the revised restrictions.

Research conducted by

This research was supported by Arnold Ventures and conducted in the Justice Policy Program within RAND Social and Economic Well-Being.

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