Ban on SBA Loans for Adult Businesses Not New – But Is It Applicable? (YNOT)

Read the full article by Gene Zorkin at YNOT.com 

WASHINGTON, D.C. – By now, you’ve probably heard that there’s language in the U.S. Small Business Administration’s (“SBA”) COVID-19 Economic Injury Disaster Loan application which appears to preclude the possibility of adult entertainment businesses applying for such loans.

In the second section of the multiple-page application (which the SBA estimates takes two hours and ten minutes to complete), applicants are required to review and check off a series of statements, all of which must apply to the applicant in order to be deemed eligible for the disaster loan.

Asked whether any adult business has ever challenged the ban, neither Walters nor Reed Lee, who sits on the Board of Directors of the Free Speech Coalition and chairs the FSC Legal Committee, knew of any prior litigation concerning the rule.

“I am not aware of any constitutional challenges by adult businesses, although there has been some discussion of potential litigation now that so many adult businesses are impacted by COVID-19,” Walters said.

Lee said he is “not aware of any particular challenges so far,” but added that the FSC “and others are looking into that history.”

“Each adult business thinking about the available federal assistance should certainly consult its lawyers before concluding that these government programs are not open to it,” Lee concluded.