TEXAS — A pandemic-related government relief fund meant to assist restaurant, bar and catering business owners has been suspended after a Texas federal judge issued an injunction in a lawsuit filed by white applicants alleging discrimination.

What You Need To Know

  • The $28.6 billion dollar Restaurant Revitalization Fund was created as part of the $1.9 trillion COVID relief act

  • The fund was administered by the Small Business Administration, which placed a 21-day priority review of applicants from historically socially and economically disadvantaged individuals

  • A Texas federal judge halted payments to more than 2,900 restaurant and bar owners after a white restaurant owner sued, alleging discrimination

The U.S. District Court for the Northern District of Texas on June 11 ordered a halt to payments from the Small Business Administration’s Restaurant Revitalization Fund, which is part of President Joe Biden’s $1.9 trillion economic stimulus plan passed by Congress in March.

Payments to more than 2,900 small business owners who were approved for the assistance program are now in limbo.  

The lawsuit was filed by American First Legal on behalf of Blessed Cajuns L.L.C., which owns the Keller-based restaurant franchise The Lost Cajun. In the suit, America First Legal argued that the efforts of the Biden administration to prioritize applicants to the Restaurant Revitalization Fund on the basis of race and gender were unconstitutional.

The Biden White House announced in January that it would put a focus on assisting historically disadvantaged business owners in its pandemic-relief programs. The announcement was met with backlash from both sides of the aisle, many questioning its constitutionality and potential for backfiring against people of color. 

In response, the SBA set a requirement for a 21-day priority period of consideration for applications from women, military veterans and “socially and economically disadvantaged” individuals. The fund did not prevent white business owners from applying or receiving funds from the program after those groups were received during the 21-day period.

The owners of The Lost Cajun, Janice and Jason Smith, who are both white, in their lawsuit, alleged discrimination based on their race. 

The Texas court’s injunction froze distributions from the fund to “priority” recipients until the case is settled, but it does not prevent the SBA from considering applicants already submitted from non-priority group business owners. 

The application period for the Restaurant Revitalization Fund started in early May, with an overwhelming response from restaurant owners across the country seeking funds from the program’s $28.6 billion coffers. The program has already issued about $27 billion in assistance relief to more than 100,000 restaurants across the country. The program closed its application acceptance period at the end of May.

American First Legal is a conservative legal assistance firm started by Stephen Miller and Mark Meadows, who both served as aides to former President Donald Trump. The firm describes its mission as “turning the legal tables on the radical activist left,” according to its website. 

“AFL is immensely proud of its vital work to stop this insidious and lawless attack on civil rights — and to fight for policies that judge Americans based on objective qualifications, and never based on their skin color,” Miller said in a statement on the group’s website regarding the Texas federal court’s injunction. “This is also a warning to the Biden Administration: if you pursue government-sponsored racism in any area, then you will go to court.” 

Applicants who received approval for the program as of May 26 will continue to receive payments, while those who have not yet heard from the agency on their application status will not receive their funds until the case is settled, according to a statement issued by the American Business Immigration Coalition. 

The SBA will direct those applicants to other resources while continuing to "do everything we can to support disadvantaged businesses getting the help they need to recover from this historic pandemic," an administration official told Reuters.