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Admiral Theatre sues over PPP loan delay, alleges regulations violate First Amendment

The suit claims the entertainment provided by the strip club is non-obscene and should not be subject to the Small Business Administration’s rules against businesses of a “prurient sexual nature.”

Michael Spalding, who is the brand manager at the Admiral Theatre, holds a certificate from a neighborhood group recognizing how clean the Admiral keeps the area. | Michael Schmidt/Sun-Times
The Admiral Theatre on Lawrence Avenue in Chicago.
Michael Schmidt/Sun-Times

Chicago’s Admiral Theatre is suing the Small Business Administration, alleging the strip club’s First Amendment rights were violated when a ruling on its loan application has been stalled by regulations that discriminate against adult businesses.

The suit filed Friday in U.S. District Court names the SBA and Treasury Secretary Steve Mnuchin as defendants.

The lawsuit claims the SBA is taking too long to rule on the North Side strip club’s Paycheck Protection Program application, which provides forgivable loans to businesses which have fewer than 500 workers.

The delay is due to SBA regulations which prohibit funding for businesses that “present live performances of a prurient sexual nature,” the lawsuit states.

However, the suit continues: “All of the entertainment provided by the admiral is non-obscene (and thus cannot be deemed prurient),” the suit states. “No entertainer performing at the Admiral has even been charged with, let alone convicted of, the crime of obscenity.”

The Admiral provided a loan application to its bank on April 4, and the bank submitted the application to the SBA on April 15, the lawsuit states. The SBA hasn’t approved or denied the application as it is still determining the club’s eligibility.

As the Admiral waits for a ruling on its application, the lawsuit states, other adult clubs around the country have either had their applications approved or denied.

“In the event that Plaintiff is unable to obtain PPP loans, it may lack the staff and/or funds to reopen following the COVID-19 pandemic, resulting in the permanent ruination of its business, the inability of Plaintiff to engaged in protected First Amendment activity, and the inability of Plaintiff’s staff, entertainers, and customers to continue engaging in or viewing protected First Amendment activity,” the suit states.

The suit seeks to have the SBA’s adult business regulations declared unconstitutional and for the Admiral’s PPP application and others like it to be processed.