A conservative legal group filed a lawsuit against the Small Business Administration (SBA) on Wednesday, alleging that the agency prioritized restaurants owned by minorities and women when allocating funds from its COVID-19 relief package.
The Wisconsin Institute for Law & Liberty (WILL) filed the lawsuit on behalf of Antonio Vitolo, the owner of Jake’s Bar and Grill in Harriman, Tenn., against U.S. Small Business Association Administrator Isabella Casillas Guzman.
The lawsuit claims that the SBA gave priority preference to restaurants owned by certain minorities and women, while pushing aside white males and other minorities, when administering the $28.6 billion Restaurant Revitalization Fund.
The fund, authorized by President Biden’s $1.9 trillion American Rescue Plan, encouraged all businesses to apply for funding, but noted that the law mandated a 21-day “priority window” for “businesses owned and controlled by women, veterans, and socially and economically disadvantaged individuals,” according to the lawsuit. The fund was administering money on a first-come, first-served basis.
Biden has previously said that female-owned and minority-owned companies have been disproportionately hurt by the economic fallout from the COVID-19 pandemic, The Associated Press reported.
Vitolo, a white male, applied for a grant from the fund on May 3, according to the lawsuit. During the application process, he received a message from the SBA notifying him that it will “only process and fund priority group applications.”
On May 4, the SBA sent Vitolo an email that the SBA would “focus their review on the priority applications that have been submitted,” adding that non-priority applications would remain in a “Review status” until the priority applications were processed in the first 21 days.
The WILL is now arguing that Vitolo’s application was “pushed to the back of the queue behind certain minority applicants and women.”
“Vitolo would be “economically disadvantaged” were it not for the racial classification in that definition,” the lawsuit writes.
The suit claims that the plaintiffs were “harmed” because they were “pushed to the back of the line,” and because they were “treated differently because of their race and gender.”
WILL said the program is “unconstitutional,” and is calling for the fund to stop allocating money unless it begins administering resources on a first-come, first-served basis “without regard to the race or gender of the applicant.”
“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. This is ugly, pernicious, and toxic. We will fight it wherever it shows up,” WILL President and General Counsel Rick Esenberg said in a statement.
According to AP, women, veterans and socially and economically disadvantaged business owners have already applied for $29 billion in aid, accounting for more than 147,000 applications. The fund has already administered $2.7 billion to 21,000 restaurants.
Aside from the priority group, the fund has received more than 266,000 total applications, requesting more than $65 billion, AP reported.
SBA officials, according to the wire service, are keeping the portal open because the administration still has potential money for businesses whose 2019 annual revenue was $50,000 or less.