Strip clubs are eligible to receive federal assistance being offered to small businesses financially hurt by the coronavirus outbreak, a federal judge wrote in a ruling on Monday.
“Simply put, Congress did not pick winners and losers in the [Paycheck Protection Program],” U.S. District Judge Matthew Leitman said of the program known as PPP, which was implemented as part of a coronavirus stimulus package Congress approved earlier this year.
“Instead, through the PPP, Congress provided temporary paycheck support to all Americans employed by all small businesses that satisfied the two eligibility requirements – even businesses that may have been disfavored during normal times.”
The Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized the Small Business Administration to allocate forgivable loans to companies with fewer than 500 employees as part of the Paycheck Protection Program. But the SBA adopted a rule excluding businesses such as banks, political lobbying firms and companies that sell products of “prurient sexual nature” from being eligible to receive aid.
DV Diamond Club of Flint LLC and 41 other strip clubs filed a motion in court seeking a preliminary injunction barring the Small Business Administration from enforcing such restrictions, Bloomberg Law noted. Leitman granted the motion, writing that the program was designed to make “loan guarantees widely available to small businesses across the commercial spectrum.”
He ordered the Small Business Administration to guarantee loans to the plaintiffs so long as they meet the requirements of the Paycheck Protection Program. The injunction only applies to the Michigan plaintiffs, Brad Shafer, the DV Diamond Club’s lawyer, told NBC News.
Leitman noted in the ruling that the plaintiffs’ businesses provided “lawful ‘clothed, semi-nude, and/or nude performance entertainment'” and that they had been forced to close amid the coronavirus pandemic. The strip clubs intended to use the funds to primarily pay for employees unable to work, he wrote.
The Small Business Administration declined to comment about the motion.