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

Unpacking the Pleasure Industry's Friend-or-Foe Status With Mainstream Outlets

Over the years, pleasure products have increasingly made their way into big-box stores and mainstream marketing channels. As a result, brands now face a complicated balancing act.

We-Vibe to Launch Retail Summer Sales Contest

We-Vibe has announced its Summer Sales contest for all North American retail staff members, running from July 3 through Aug. 7.

Ofcom Investigates FTV Sites for Possible AV Noncompliance

U.K. media regulator Ofcom is investigating First Time Videos, which operates the sites FTVGirls.com and FTVMilfs.com, for possible failure to comply with age assurance requirements under the Online Safety Act.

Onahole Debuts New 'Cow Gal' Love Torso

Pleasure brand Onahole has introduced its new Cow Gal love torso.

Orion Debuts New Weighted Pelvic Floor Trainer From 'You2Toys' Line

Orion Wholesale has introduced a new weighted pelvic floor trainer from its You2Toys line.

Howl Marks Successful Fundraising Campaign

Wellness brand Howl has announced the success of its crowdfunding goal of £370,000.

Male Power Debuts New 'Oh Snap!' Collection

Male Power has introduced the Oh Snap! line of men’s underwear.

Electric Novelties Debuts New 'Gemsations' Anal Plug Collection

Electric Novelties has introduced its Gemsations line of anal plugs in silicone and metal options.

FSC Publishes Analysis of Federal Trade Commission Event Promoting AV

Free Speech Coalition (FSC) has published an analysis of a Federal Trade Commission (FTC) event held this week that promoted age verification among other forms of speech regulation.

Adam & Eve Reveals Results of 'Happy Ending Dream' Survey

Adam & Eve has released the results of a survey asking respondents if they have ever had a sex dream with a happy ending.

Show More