Court Denies SBA's Request to Pause Order Allowing Strip Club Loans

Court Denies SBA's Request to Pause Order Allowing Strip Club Loans

CINCINNATI — A three-judge majority in the Sixth Circuit appeals court denied the Small Business Administration’s (SBA) request to pause last week’s decision by a Michigan judge establishing that local strip clubs should be eligible for the Payment Protection Program (PPP) as part of the U.S. Congress-approved COVID-19 relief package, regardless of the “prurient clause” included as part of the application.

The Sixth Circuit judges denied the SBA’s emergency motion for a stay, filed last week, attempting to uphold the “prurient clause” that has allowed them for decades to discriminate against sexually oriented businesses.

The “prurient” clause on the SBA loan application form, as XBIZ has been reporting, replicates mid-1990s language designed to discriminate against sexually oriented businesses.

The form compels applicants to declare that they do not “present live performances of a prurient sexual nature or derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature.”

The word “prurient” is an imprecise, obscure word that means “appealing to unhealthy sexual interests” and was used by the U.S. Supreme Court in a landmark 1973 ruling. Several members of the adult entertainment community and First Amendment lawyers have pointed out that people who do not consider their sexual expression “unhealthy” are exempt from application of the “prurient” clause.”

DV Diamond Club of Flint LLC and other 41 other strip clubs sued the SBA, alleging they were put in the position of being denied for PPP loans because of the “prurient clause.”

Last Monday, U.S. District Judge Judge Matthe F. Leitman issued an injunction ordering the SBA “not exclude Plaintiffs from participating in the PPP on the ground that they present entertainment or sell products of a ‘prurient sexual nature.’”

The Sixth Circuit’s majority opinion emphasized that the CARES Act states that "any business concern" is eligible for the loan, based on the standards of being a small business employing less than 500 people.

"That broad interpretation also comports with Congress's intent to provide support to as many displaced American workers as possible and, in doing so, does not lead to an 'absurd result' as the SBA claims," the Sixth Circuit appeals court ruled.

The court stressed that “the public interest is served in guaranteeing that any business, including plaintiffs', receive loans to protect and support their employees during the pandemic which, we can all agree, constitutes extraordinary circumstances."

Related:  

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

JuicyAds Wins Trademark Infringement Case Against Fraudulent Domain

JuicyAds has won its World Intellectual Property Organization (WIPO) case against a website using a similar domain to impersonate the company's site and defraud customers.

ProDx Health Introduces 'Power Femme' Test

ProDx Health has introduced its new Power Femme Home Collection Kit.

Orion Expands Cottelli 'Accessoires' Line

Orion Wholesale has introduced five new “It” pieces from its Cottelli Accessories line.

ANME Wraps With Product Drops and Partnerships

ANME wrapped on Wednesday, the event’s third day, after delivering a mix of product launches, power meetings and networking — all while preserving the laid-back vibe that attendees say always makes ANME feel like a homecoming.

Playharda Wholesale, Secret Dome Ink U.K. Distro Deal

Playharda Wholesale and BDSM brand Secret Dome have signed a deal for UK distribution.

Hankey's Toys Releases 'Kitsune's Knot' Dildo

Mr. Hankey's Toys has introduced its new Kitsune’s Knot dildo.

France Reinstates Age Verification Rule for EU Sites

France’s highest court, the Council of State, on Tuesday reinstated age verification rules for EU-based sites under the country’s Security and Regulation of the Digital Space (SREN) law, ruling in favor of the French government and against Hammy Media.

Velvet Thruster Signs Distro Deal With ECN

Velvet Thruster has inked a distribution deal with East Coast News (ECN).

Kiiroo Introduces New Agatha Vega Stroker

Kiiroo has debuted the new Agatha Vega stroker sleeve from its FeelStar line.

Show More