Small Business Rescue Cash Isn’t for Lobbyists, Judge Rules


(Bloomberg) -- Political consulting and lobbying firms were rebuffed in an effort to tap coronavirus rescue money, as a federal judge ruled that the funds for small businesses are essentially subsidies that lobbyists can’t receive from the government.

The firms can’t tap Paycheck Protection Program loans disbursed by the Small Business Administration because a decades-old regulation bars the agency from subsidizing political speech, U.S. District Judge Royce C. Lamberth said in a decision late Tuesday in Washington.

The loan program created under the $2.2 trillion CARES Act caps interest at 1%, waives several borrower standards and allows for possible forgiveness as great as the loan’s full principal depending on the company’s payroll costs and other factors, the judge said. Claiming that such an offer is a loan rather than a subsidy “is a distinction without a difference,” according to the ruling.

“There is no doubt that PPP loans confer a financial benefit not otherwise available to businesses in the open market,” the judge said. “This is, of course, the point of an economic stimulus -- to prop up the economy while the private sector struggles to provide gainful employment to Americans seeking work.”

“Most of our member firms are small businesses, with a majority having fewer than 10 employees,” President Rose Kapolczynski said in a statement, adding that the economic crisis will weigh especially on those that depend heavily on personal contact, such as signature gathering and event organizing.

“Our members are excluded solely because they help clients exercise their First Amendment rights,” she said.

The case is American Association of Political Consultants v. U.S. Small Business Administration, 20-cv-970, U.S. District Court, District of Columbia.

Read More

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.