Assisting Small Businesses Not Fraudsters Act
- Bill Number
- H.R. 825
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Commerce
- Status
- Passed House
- Latest Action
- 2025-02-25: Received in the Senate and Read twice and referred to the Committee on Small Business and Entrepreneurship.
- Last Updated
- 2026-07-11T10:38:23Z
AI-Generated Summary
Purpose of the Legislation
The "Assisting Small Businesses Not Fraudsters Act" (H.R. 825) aims to protect federal small business assistance programs by barring individuals and businesses linked to fraud convictions from receiving most forms of financial aid from the Small Business Administration (SBA). It targets misuse of government funds, particularly in programs created during the COVID-19 pandemic, to ensure aid goes to legitimate recipients.
Key Provisions
- Prohibition on Assistance: Adds a new subsection (h) to Section 16 of the Small Business Act (15 U.S.C. 645), making individuals ("associates") of a small business ineligible for SBA financial assistance if they are "finally convicted" (a conviction that is no longer appealable or has exhausted all appeals) of crimes involving financial misconduct or false statements related to "covered" loans or grants.
- Definition of Associates: Includes officers, directors, owners of more than 20% equity, key employees, entities they control (at least 20% ownership), or others in control of the business (excluding licensed small business investment companies).
- Business-Level Ineligibility: If a small business has an ineligible associate, the entire business becomes ineligible for SBA financial assistance.
- Exception: The ban does not apply to disaster loans under Section 7(b) of the Small Business Act.
- Covered Loans and Grants: Specifically includes:
- Paycheck Protection Program (PPP) loans under Sections 7(a)(36) and 7(a)(37).
- Economic Injury Disaster Loans (EIDL) under Section 7(b) provided in response to COVID-19.
- Grants under Section 5003 of the American Rescue Plan Act (Restaurant Revitalization Program) and Section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Shuttered Venue Operators Grants).
- Applicability: The new rule does not affect any government contracts or agreements entered into before the bill's enactment.
Significant Changes to Existing Law
- This introduces a new, targeted ineligibility clause to the Small Business Act, which previously lacked a specific fraud-based ban on SBA assistance for pandemic-related programs.
- It expands restrictions beyond general debarment rules (which prevent federal contracting with certain offenders) to directly impact SBA's financial aid programs, focusing on convictions tied to specific COVID-19 relief efforts.
- No retroactive application to pre-enactment deals, preserving existing commitments while applying forward.
Potential Impacts
- On Government Agencies: The SBA will need to implement screening processes to check for convictions among business associates, potentially increasing administrative workload and costs for verifying eligibility in loan and grant applications. This could reduce fraud losses and improve program integrity.
- On Citizens: Legitimate small business owners without fraud ties may face indirect delays in aid due to enhanced reviews, but the measure protects taxpayers by preventing fraudulent entities from accessing funds. Convicted individuals or their associated businesses will lose access to most SBA aid, limiting their recovery options post-conviction.
- On International Relations: No direct impacts, as the bill focuses on domestic small business programs.
Main Stakeholders Affected
- Small Business Owners and Associates: Particularly those involved in COVID-19 relief programs; owners with >20% stake or key roles in businesses with convicted associates will be barred from aid.
- Small Businesses: Entities with ineligible associates cannot receive SBA financial assistance (except disaster loans), affecting startups, nonprofits, and venues reliant on federal support.
- SBA and Federal Government: As the administering agency, the SBA must enforce the rules, impacting its operations and budget allocation.
- Taxpayers and Honest Businesses: Benefit from reduced fraud, ensuring more aid reaches non-fraudulent recipients.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: Strengthens enforcement against fraud in federal programs by tying ineligibility to "final" convictions, which respects due process (as it waits for appeals to conclude). It may lead to increased litigation over "associate" definitions or conviction relevance, but provides clear criteria to minimize ambiguity.
- Constitutional Implications: Aligns with Congress's spending power to condition federal aid on eligibility rules; no apparent conflicts with equal protection or due process, as it targets criminal conduct rather than protected classes.
- Political Implications: Reflects bipartisan concerns over pandemic relief fraud (e.g., PPP misuse), potentially building public trust in government programs while signaling zero tolerance for financial crimes in small business support. As a House-passed bill referred to the Senate Committee on Small Business and Entrepreneurship, it could influence future SBA reforms.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Williams, Roger [R-TX-25]
Cosponsors (3)
Rep. Mfume, Kweisi [D-MD-7], Rep. Simon, Lateefah [D-CA-12], Rep. Goodlander, Maggie [D-NH-2]
Recent Actions
- 2025-02-25: Received in the Senate and Read twice and referred to the Committee on Small Business and Entrepreneurship.
- 2025-02-24: Motion to reconsider laid on the table Agreed to without objection.
- 2025-02-24: On motion to suspend the rules and pass the bill Agreed to by the Yeas and Nays: (2/3 required): 405 - 0 (Roll no. 43). (text: CR H737) (Roll call 43)
- 2025-02-24: Passed/agreed to in House: On motion to suspend the rules and pass the bill Agreed to by the Yeas and Nays: (2/3 required): 405 - 0 (Roll no. 43). (text: CR H737) (Roll call 43)
- 2025-02-24: Considered as unfinished business. (consideration: CR H748)
- 2025-02-24: At the conclusion of debate, the Yeas and Nays were demanded and ordered. Pursuant to the provisions of clause 8, rule XX, the Chair announced that further proceedings on the motion would be postponed.
- 2025-02-24: DEBATE - The House proceeded with forty minutes of debate on H.R. 825.
- 2025-02-24: Considered under suspension of the rules. (consideration: CR H737-739)
- 2025-02-24: Mr. Williams (TX) moved to suspend the rules and pass the bill.
- 2025-01-28: Referred to the House Committee on Small Business.
- 2025-01-28: Introduced in House
- 2025-01-28: Introduced in House
Bill Versions
- Assisting Small Businesses Not Fraudsters Act — issued 2025-02-24 — PDF (6 pages)
- Assisting Small Businesses Not Fraudsters Act — issued 2025-01-28 — PDF (4 pages)
- Assisting Small Businesses Not Fraudsters Act — issued 2025-02-25 — PDF (4 pages)