Statement from FSC regarding SBA Loans
Many FSC members have raised concerns about a provision in the new Small Business Administration’s Economic Injury Disaster Loan Program, which might appear to specifically discriminate against adult businesses.
In order to qualify for the SBA Loan, applicants are required to check several boxes, one of which requires them to attest that their business is not involved in performances or sales of a “prurient sexual nature”:
“Applicant does not present live performances of a prurient sexual nature or derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature.”
Some have feared that adult businesses are entirely excluded from the loan program. While there have been no rulings on the matter, and thus we can not provide any definitive legal recommendations, the language may be narrower than first assumed.
Why? Because the word “prurient” has a specific meaning in the context of court rulings on obscenity. “Prurient” is defined as a “shameful or morbid interest in nudity, sex, or excretion,” and has historically been used to identify “obscene” content that is not protected by the First Amendment. (In the past several decades, only a handful of works have been deemed prurient, and thus obscene.)
Most of our members would not define their work or the products they sell as “shameful” or “morbid,” but instead as natural and healthy.
We cannot advise whether or not a specific applicant should check that box — for that, we recommend speaking with an experienced First Amendment attorney. However, as it’s written, the loan application does not seem to exclude all adult businesses.
Please note: In the “Paycheck Protection Program,” which is administered by banks, rather than the SBA, some banks are apparently disqualifying any “sexually oriented business.” That is not a requirement of the federal government but private discrimination by certain banks. It is unclear if there are legal avenues to address that private discrimination. For that, we’d also recommend you check with an experienced First Amendment attorney.