Strip club stimulus reveals lingering uncertainties over US small business aid

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Strip clubs across the United States closed earlier this year in the face of COVID-19 social-distancing measures that precluded the up-close ...

WASHINGTON: Backlights off, music quiet and poles bare, strip clubs across the United States closed earlier this year in the face of COVID-19 social distancing measures that precluded the up-close nature of the exotic dancing industry. Like many businesses, these cabarets, lounges and gentlemen’s clubs hoped a US$660 billion Small Business Administration loan program would help them weather the lockdown.

Will the SBA allow clubs that have not won a court order to participate? And for those that received loans, either through court order or from banks that apparently took a broad interpretation of the law, will the government forgive the loans, as it does for other borrowers? An SBA representative did not directly respond to questions about the discrepancies surrounding the loans.

His bank in Philadelphia denied the loan, citing SBA rules. When Meehan applied in Pittsburgh with PNC Bank for a different club, though, he was approved for a loan of between US$150,000 and US$350,000.A spokeswoman for PNC declined to comment on specific loans, but said the bank sought to process all applications in accordance with SBA guidelines.

“Although it’s not clear that the 7 program’s eligibility rules apply to PPP loans, companies that do not satisfy these rules could be sued, as could their lenders,” said Scott Pearson, a partner with Manatt, Phelps & Phillips LLP in Los Angeles. A representative of RCI declined to comment. A spokesman for lender Hancock Whitney Corp , which according to government data approved a loan to RCI Entertainment Inc in New Orleans, told Reuters the firm “followed all of the guidance that was provided by the SBA, which changed frequently as the program was being rolled out".

 

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Strip-club stimulus reveals lingering uncertainties over US small-business aidBacklights off, music quiet and poles bare, strip clubs across the United States closed earlier this year in the face of COVID-19 ...
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