AEO Public Comments on S.1047 / H.R.825, the Assisting Small Businesses Not Fraudsters Act

April 1, 2025

The Honorable Joni Ernst
Chair
Senate Committee on Small Business and Entrepreneurship
428A Russell Senate Office Building
Washington, DC 20510

The Honorable Edward J. Markey
Ranking Member
Senate Committee on Small Business and Entrepreneurship
255 Dirksen Senate Office Building
Washington, DC 20510

RE: Comments on S.1047 / H.R.825, the Assisting Small Businesses Not Fraudsters Act

Dear Chair Ernst, Ranking Member Markey, and Members of the Committee:

On behalf of the Association for Enterprise Opportunity (AEO), the nation’s leading voice of innovation for entrepreneurship and small business, I write to express support for the intent behind S.1047 / H.R.825, the Assisting Small Businesses Not Fraudsters Act. We commend the Committee’s commitment to safeguarding the integrity of Small Business Administration (SBA) programs. At the same time, we urge the inclusion of narrowly tailored amendments to prevent unintended harm to small business owners—particularly returning citizens, or formerly incarcerated individuals—who are working to contribute to their communities and local economies.

AEO represents a national network of technical assistance providers, lenders, and advocates serving over 34 million small business owners, including those owned by justice-impacted individuals or employ returning citizens. AEO’s body of research—including a forthcoming 2025 fact sheet on returning citizen entrepreneurs, attached here—highlights the persistent barriers these individuals face, the transformative role entrepreneurship can play in reducing recidivism, and the importance of equitable access to SBA resources to support this pathway to economic reintegration.

We understand and support the objective of barring bad actors who defrauded pandemic-era SBA programs. However, we are concerned that the current bill language may disqualify businesses that were not involved in such fraud and discourage the hiring or partnership of returning citizens—even if those individuals have served their time. Specifically, we urge the Committee to consider the following recommendations:

Clarify the definition of “key employee.”
As currently written, the bill defines “associate” to include a “key employee,” but this term is not defined in statute or regulation. The reference to SBA standard operating procedures leaves room for broad and shifting interpretations. We recommend aligning the definition with the Internal Revenue Code, which provides clearer and more stable criteria.

Avoid retroactive or overly broad disqualifications.
The bill could disqualify businesses from SBA loans even if:

The associate had no connection to the business at the time the fraud was committed;

The business had no role in or knowledge of the fraud; and

The associate has fully served their sentence.

We respectfully urge the Committee to ensure that SBA loan ineligibility applies only when the associate’s fraud was directly tied to a loan or grant received by the business, and to allow formerly incarcerated individuals to be eligible once they have served their sentence.

AEO stands ready to support legislative solutions that balance accountability with opportunity. We appreciate the Committee’s leadership on this important issue and your attention to protecting both the integrity and impact of SBA programs.

Sincerely,