Michigan Judge Rules Strip Clubs and Other ‘Disfavored Businesses Are Entitled to Receive Paycheck Protection Program Loans

A federal judge in Michigan ruled Monday that strip clubs that present live performances or sell products of a “prurient sexual nature” and other “disfavored” businesses, cannot be barred from the Small Business Administration’s Paycheck Protection Program.

The PPP is a loan designed to provide a direct incentive for small businesses, including faith-based organizations and other nonprofits, to keep their workers on the payroll during the coronavirus pandemic, the Small Business Administration says. “If all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities,” these loans, which are administered by banks and other federally insured depository institutions, will be forgiven, the SBA explains.

In a preliminary injunction, U.S. District Judge Matthew Leitman said the SBA cannot exclude strip clubs and other businesses such as banks, political lobbying firms and restricted private clubs from the roughly $660 billion program.

The injunction stems from a lawsuit filed against the SBA by DV Diamond Club of Flint LLC, which operates as Little Darlings. Little Darlings is a part of the national strip club empire overseen by businessman Jason Mohney, The Detroit News reported.

The lawsuit alleged that the SBA regulation discriminates against an $8 billion industry that includes thousands of strip clubs nationwide with more than 57,000 employees. With their discrimination, Little Darlings argued that the SBA violated the First and Fifth Amendments as they are businesses abiding by the law.

“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,” Judge Leitman said, according to Law360.

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SOURCE: Christian Post, Leonardo Blair