Over the past two weeks, businesses have been scrambling to submit their application to the Payroll Protection Program, which guarantees federal funds for businesses to keep their employees on the payroll.
But the guidelines for the program come with some stipulations and regulations. Among them are businesses who make more than 5% of their income from, “lawful activities of a prurient sexual nature.”
In other words, local sex shops, strip clubs and sex resource centers are being denied help from the feds. That means they may face bankruptcy and permanent closure.
Ellen Barnard is a co-owner of A Woman’s Touch, which offers what it characterizes as education and products promoting sexual health and pleasure for everyone.
Now, she says, the store is facing closure because they’re not eligible for the federal money.
“We’re doing everything we can to get enough business so that we can pay our fixed expenses,” she said. “It makes me angry because they won’t make an exception for sexual health. It makes me angry that they won’t make an exception for something that is clearly both health-related and professionally run. But, you know, am I surprised? No.”
According to Barnard, the closure of A Woman’s Touch will mean more than just losing a place to work. She and her partner have sunk considerable personal financial stakes into the success of their business.
“If we can’t make our expenses, we’ll lose our house. And our savings. And that’s the reality of it. That’s part of what it means to be a small business owner for many of us. I mean, I think the hardest part of it for us is the fear and the stress. And the ‘Oh Gosh, how are we going to manage this?’ Part of it,” she said.
The Paycheck Protection Program was designed to incentivize small business owners to keep employees on payroll during the COVID-19 pandemic. The program issues loans to small businesses which are then forgiven if employees are kept on payroll for at least eight weeks after receiving the loan.
The United States Small Business Administration, which operates the program, has approved more than 43,000 individual loans in the state of Wisconsin. The federal agency has budgeted approximately $8.3 billion to fulfill the loans.
One Wisconsin strip club is filing suit against the Small Business Administration for being shut out of the program.
The Silk Exotic Gentlemen’s Club of Milwaukee and Middleton filed its application quickly after the program became available. But that application was rejected, and Silk Exotic has since filed a lawsuit against the federal agency, arguing that the denial is an infringement on their First Amendment rights.
In a hearing last Wednesday, lawyers for the Small Business Administration argued that a lack of funding does not equal suppression. They say that while the government can’t censor certain types of protected speech, they’re under no obligation to finance it.
U.S. District Judge Lynn Adelman issued a restraining order for the case, temporarily allowing the Strip Club to resume the application process for the Payroll Protection funds. In his decision, Adelman said that he needed more time to review the details of the case before making a final decision.
Adelman’s decision, however, may end up being a moot point.
Last Wednesday, the Small Business Administration announced that it had run out of funding for the program. The agency can’t approve any more applications until Congress puts more money back in the coffers.
In a press release issued alongside the announcement, U.S. Treasury Secretary Steven Mnuchin urged Congress to approve additional funding for the program.
Editor’s Note: A previous version of this story incorrectly said the SBA budgeted $7.3 million for Wisconsin PPP Loans. The correct number is $8.3 billion, according to the most recent numbers from the federal agency.
