Tennessee Restaurant Owner Fights Feds Over Recovery Funds

Photo: Jake’s Bar & Grill (Restaurant & Tavern) in Harriman, Tennessee

Photo Credit: Donald Wampler / Google

Published May 27, 2021

By Jon Styf [The Center Square contributor] –

A nonprofit conservative law firm from Wisconsin has appealed the decision of a federal judge in Tennessee who threw out a temporary restraining order looking to end the prioritization of COVID-19 pandemic restaurant recovery funds.

Tennessee Capitol Building in Nashville

The Wisconsin Institute for Law & Liberty filed the federal lawsuit against the U.S. Small Business Administration (SBA) on behalf of Antonio Vitolo, owner of Jake’s Bar and Grill in Harriman.

Vitolo applied to receive federal relief from the $28.6 billion Restaurant Revitalization Fund that was created as part of the American Rescue Plan Act.

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After filing his request for funding, Vitolo was told women and minority restaurant owners would be prioritized during the first 21 days of fund disbursement, which began on May 3. The Wisconsin Institute for Law & Liberty filed for a restraining order on Vitolo’s behalf to halt disbursement of funding until a ruling was issued, arguing it was unfair that Vitolo did not have the same chance to receive funds as other similar business owners.

U.S. District Judge Travis McDonough, of Knoxville, ruled against the restraining order last week, saying the government could justify the prioritization in funds because “Congress had evidence before it suggesting that its initial COVID-relief program, the PPP, disproportionately failed to reach minority-owned businesses due (at least in part) to historical lack of relationships between banks and minority-owned businesses, itself a symptom of historical lending discrimination.”

The Wisconsin Institute for Law & Liberty has filed an emergency appeal of McDonough’s ruling.

Vitolo said he received an email May 7 from the SBA stating it had received 186,200 applications in the first two days, including 46,400 from women business owners and 30,800 from minority restaurant owners.

“Unless Defendant is immediately enjoined, Plaintiffs may never be able to recover from the Restaurant Revitalization Fund program if the funds run out before the application is processed,” the appeal stated.

The Paycheck Protection Program was established last year with $349 billion in federally guaranteed loans for businesses. After significant interest in the program, an additional $310 billion was added to the fund

A study presented to Congress, however, showed that those funds were not distributed equally.

“PPP loans were not administered equally to all kinds of businesses,” McDonough’s ruling read. “Congressional investigation revealed that minority-owned and women-owned businesses had more difficulty accessing PPP funds relative to other kinds of business.”

Vitolo said he received communication from the SBA that, if approved, his business would be awarded $104,590 in relief funds. He is concerned, however, that those funds won’t be available after the initial 21-day priority period ends.

“Vitolo does not fit into any of these categories because he is not a woman, veteran, or socially disadvantaged because of his race,” the appeal read. “He would, however, qualify as ‘economically disadvantaged,’ but for his race.”

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