U.S. Rep. Jim Hagedorn, ranking member of the House Subcommittee on the Underserved, Agricultural and Rural Business Development, sent a letter last week to the Small Business Administration (SBA) requesting information about an allegedly discriminatory relief fund.
“The Restaurant Revitalization Fund launched by SBA in May shut out thousands of American small businesses from receiving aid simply because they are not viewed as a ‘priority’ by the current administration. Now more than ever, SBA’s programs are crucial to the success of American small businesses and should be open to all entrepreneurs in need, not just those that fall under a certain group or category,” the Minnesota congressman told Fox News.
“To be clear, saving spots for business owners that have certain racial, economic or social qualities is reverse discrimination and un-American,” he added.
The fund was included in President Joe Biden’s “American Rescue Plan” with a goal of providing money for restaurant owners devastated by the government’s COVID-19 shutdowns. The nearly $30 billion fund provided grants covering the difference between revenues a restaurant recorded in 2020 and 2019.
Hagedorn is also seeking information from the SBA on how it intends to change its policies and programs to align with Biden’s “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government” executive order.
Hagedorn’s office said this executive order “has resulted in thousands of small businesses being excluded from relief programs due to the Biden administration’s prioritization of certain individuals.”
The SBA is led by Isabella Guzman, a California progressive who was already defeated at the circuit court level last month.
The lawsuit filed against her claimed non-minority business owners were “pushed to the back of the line,” and “treated differently because of their race and gender.” The SBA grant program is further accused of “giving priority to certain groups” and putting “white male applicants at significant risk that, by the time their applications are processed, the money will be gone.”
The owners filed after learning that their applications were in “review status” while “priority” was given to minority applicants.
In response, a bipartisan group of congressmen hopes to add another $60 billion to the fund, but these talks only recently commenced.
Now, multiple lawsuits filed in June by a group of Tennessee and Texas business owners claim the program unfairly prioritizes the distribution of initial funds to minority business owners. According to the plaintiffs, this rule discriminates specifically against white men.
A preliminary injunction issued by a Texas court has now prevented the SBA from distributing some grants under the program.
While data does show minority businesses were more severely impacted by COVID-related shutdowns — it’s also reportedly more challenging for these business owners to receive financing compared to their non-minority counterparts — it’s debatable whether that gives them the right to receive funds ahead of other business owners also significantly impacted, simply due to their skin color.
“Under the guise of pandemic relief, the American Rescue Plan Act enables the federal government to engage in illegal and unconstitutional race and sex discrimination,” Rick Esenberg, president of the Wisconsin Institute for Law and Liberty, said in a press release. “This is ugly, pernicious, and toxic.”
Earlier this month, the Wisconsin firm succeeded in convincing a federal judge to halt payments from an unconstitutional Biden administration loan forgiveness program that disallowed relief to white farmers.
More funding for the SBA program is also a question of necessity, since the economy is rebounding; most restaurants are fully open, and the challenge is now to find workers more so than getting stimulus monies.