Prohibiting Individuals Convicted of Defrauding the Government From Receiving Any Assistance From the Small Business Administration

Floor Speech

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Mr. WILLIAMS of Texas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 5427) to prohibit individuals convicted of defrauding the Government from receiving any assistance from the Small Business Administration, and for other purposes, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 5427

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. ASSISTANCE PROHIBITED AFTER FRAUD CONVICTION.

(a) In General.--Section 16 of the Small Business Act (15 U.S.C. 645) is amended by adding at the end the following new subsection:

``(h) Financial Assistance Prohibition.--

``(1) In general.--An associate of a small business concern who is finally convicted of any crime involving or relating to financial misconduct or a false statement with respect to a covered loan or grant shall be ineligible to receive any financial assistance from the Administrator, other than financial assistance under section 7(b).

``(2) Business concerns.--A small business concern that has as an associate an individual subject to paragraph (1) shall be ineligible to receive any financial assistance from the Administrator, other than financial assistance under section 7(b).

``(3) Definitions.--In this subsection:

``(A) Associate.--The term `associate' means, with respect to a small business concern--

``(i) an officer, director, or owner of more than 20 percent of the equity of, or a key employee of, such small business concern;

``(ii) any entity not less than 20 percent owned or controlled by one or more individuals referred to in clause (i); and

``(iii) any other individual or entity in control of or controlled by such small business concern, except for a licensed small business investment company (as defined in section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662(3)).

``(B) Covered loan or grant.--The term `covered loan or grant' means--

``(i) a loan made under--

``(I) paragraph (36) or (37) of subsection (a) of section 7 of the Small Business Act (15 U.S.C. 636); or

``(II) subsection (b) of such section in response to the COVID-19 pandemic; or

``(ii) a grant made under--

``(I) section 5003 of the American Rescue Plan Act of 2021 (15 U.S.C. 9009c); or

``(II) section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (15 U.S.C. 9009a).

``(C) Finally convicted.--The term `finally convicted' means, with respect to an individual or entity, that such individual or entity has been convicted of an offense and such conviction--

``(i) has not been appealed and is no longer appealable because the time for taking an appeal has expired; or

``(ii) has been appealed and the appeals process for such conviction is completed.''.

(b) Applicability.--Subsection (h) of section 16 of the Small Business Act (15 U.S.C. 645), as added by subsection (a) of this Act, shall not apply to any contract or other agreement entered into by the Government prior to the date of the enactment of this Act.

Mr. Speaker, I rise today in support of my bill, H.R. 5427. This legislation prohibits any individuals convicted of defrauding the government's COVID-19 lending programs from ever receiving future financial assistance from the SBA.

When the COVID-19 pandemic hit America, the SBA took on an outsized role in helping small businesses. They partnered with banks and credit unions to set up the Paycheck Protection Program that ultimately got over $800 billion to Main Street to keep businesses from laying off employees. Additionally, the SBA ran the Economic Injury Disaster Loan program, better known as the COVID EIDL program, that gave out close to $480 billion in low interest loans.

While both of these programs were successful in keeping businesses afloat during the pandemic, we have seen some very troubling data come out in recent months.

SBA's Office of Inspector General has estimated over $200 billion of these relief funds were given to fraudulent actors. This means that roughly 20 percent of all the money that was supposed to help businesses went to the wrong people, and, unfortunately, we have seen some estimates show that this 20 percent figure might be on the low end.

The committee is working to find creative ways to get this money back to the taxpayers, but in the meantime, we also cannot let those who committed these crimes off easy. That is where my legislation comes in. This bill prevents anyone who was convicted of defrauding the SBA's lending programs from receiving any future financial assistance from the agency. If someone saw the pandemic as an opportunity to enrich themselves, then they should never be given the opportunity to utilize any of these financial programs again.

These criminals took money away from businesses across the country that were in desperate need of assistance. This bill provides an additional layer of security for government programs so people who have taken advantage of past programs cannot commit a similar crime in the future.

A lot will need to be done to correct all of the issues within the SBA that allowed these unacceptable levels of fraud to occur, but as those internal issues are corrected, this bill will help rebuild confidence in the agency.
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Mr. WILLIAMS of Texas. Mr. Speaker, I have no further speakers, and I am prepared to close.

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Mr. WILLIAMS of Texas. Mr. Speaker, H.R. 5427 is simple. It needs to be passed.

I also want to thank my colleague from Maryland (Mr. Mfume) for all his support working on this bill. I thank him for his support.

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