on Friday 11th June, Small Business Administration halts distribution of pandemic relief funds to thousands of minority-owned businesses. The decision came after a Texas judge issued an injunction on releasing the funds following a lawsuit from a Dallas-Fort Worth restaurant alleging that the program’s ability to distribute funds to businesses owned by women, veterans, and racial minorities. The plan is unconstitutional.
The Small Business Administration announced the pause, which prevents more than 2,900 of those businesses from receiving the COVID relief money allocated to the Restaurant Revitalization Fund, according to Reuters. The lawsuit was filed by a legal advocacy group called America First Legal, Founded by Stephen Miller and Mark Meadows, both are aides of former President Donald Trump, on behalf of Keller Restaurant called Lost Cajun. (Note: The Reuters piece refers to the restaurant as “Blessed Cajun,” which is the limited liability corporation that operates Lost Cajun).
In the lawsuit, Lost Cajun owners Janice Smith and Jason Smith, along with Pennsylvania restaurant owner Eric Nieman, allege that the Small Business Administration’s plan to distribute pandemic relief funds to small businesses is unconstitutional. The owners of Lost Cajun are white, and claim that the decision does not provide them with equal protection under the law, as required by the United States Constitution.
According to the lawsuit, Janice Smith and Jason Smith applied for assistance from the Restaurant Revitalization Fund on May 5 and found they were entitled to more than $187,000 in relief. Neither of the owners qualifies for priority as a “socially disadvantaged person,” meaning that their application will not be processed until after the 21-day period in which the administration has been given access to those groups. Instructions have been given to process the applications.
Of course, the Biden administration’s guidance doesn’t prevent white business owners from seeking fund relief, it Only requires that the Small Business Administration prioritize applications from female-owned, minority-owned, and veteran-owned businesses for the first 21 days that applications are open..
The suit alleges that Smith is being subjected to unconstitutional race and sex discrimination by “preferences” that statute mandates for minority and women-owned businesses, and that’s because the restaurant revitalizes the fund. There were more than half the requests for Committed by business owners under those categories, it is possible that “Congress exhausted the entire $28.6 billion allocated to the Restaurant Revitalization Fund before plaintiffs could consider relief under the program.”
The lawsuit opens the door to a class action suit, in which “all restaurant owners and restaurateurs in the United States who are facing or who will face race or sex discrimination from the Small Business Administration,” potentially be entitled to relief from the court. can.
A similar lawsuit was filed in Tennessee in May. It also alleged that the program was discriminating against white people by prioritizing minority-owned businesses.. That lawsuit is still pending, but unlike the Texas case, Tennessee Judge Travis McDonough denied the group’s request for an injunction that would have halted the disbursement of the funds.
According to Reuters, the temporary injunction issued by District Judge Reed O’Connor allows the Small Business Administration to continue distributing funds to “non-priority” applicants, but it is not clear if the more than 2,900 businesses whose applications were affected by the injunction Had happened. able to get their money.
Biden administration vows it will continue to fight Texas judge’s order in court, but it is not clear when applicants to the Restaurant Revitalization Fund who apply as “socially disadvantaged persons” will be able to get the money they need.