Following Legal Challenge U.S. Government Stops Restaurant Revitalization Funds

Judges say the government’s plan to prioritize applications from businesses owned by minorities, women, and veterans is discriminatory.

The agency rescinded the approvals after judges in Tennessee and Texas issued injunctions on the disbursement of the funds in response to restaurant lawsuits claiming that the Restaurant Revitalization Fund priority period was unconstitutional.

In a letter to applicants posted on Reddit, the SBA said:

Dear Applicant,

We regret to inform you that, due to recent court rulings, the U.S. Small Business Administration (SBA) will not be able to disburse your Restaurant Revitalization Fund award

Through the American Rescue Plan Act, the SBA launched the Restaurant Revitalization Fund, which prioritized applications from small businesses owned and controlled by women, veterans, and socially and economically disadvantaged individuals for the first 21 days of the program. After SBA launched the Restaurant Revitalization Fund, three lawsuits were filed challenging the 21-day priority application period – one in the Eastern District of Tennessee and two in the Northern District of Texas. These lawsuits have led to three adverse court rulings against the SBA.

The SBA is not able to pay 2,965 priority applicants – including yourself – who were previously approved and notified of their approval. SBA will not pay these claims because the legal conclusions in these court rulings would preclude payment. Yesterday, the U.S. Department of Justice, on behalf of the SBA, filed a notice and a declaration in the Northern District of Texas and the Eastern District of Tennessee to notify the courts that these 2,965 payments would not be made.

SBA’s leadership is frustrated with this outcome and remains committed to doing everything we can to support disadvantaged businesses getting the help they need to recover from this historic pandemic.

The RRF has distributed $27.4 billion of its $28.6 billion budget to roughly 100,000 recipients, according to an SBA official. Small Business Administration Associate Administrator The New York Times reported that Patrick Kelley said that around 72,000 of the applicants who have already been paid were part of the agency’s prioritization process.

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