A Las Vegas company filed a federal lawsuit against the Small Business Administration on Monday, claiming it has mismanaged the Coronavirus Aid, Relief, and Economic Security Act (CARES Act.)
Attorney Brian Shapiro, on behalf of his client, LIT Ventures, alleges the agency failed to comply with provisions of the CARES Act, which promised $10,000 emergency grants to small businesses as a result of economic damages from COVID-19.
The lawsuit alleges the SBA changed the terms of the program, as announced by President Donald Trump.
“The SBA’s decision to implement procedures in contravention of the CARES Act are
arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law,” Shapiro wrote on behalf of his client.
Restaurant chains such as Ruth’s Chris, which typically operate with greater capital resources, have come under fire for receiving aid under the act, which allowed companies with fewer than 500 employees per location to apply. Funding for the program almost immediately dried up before it could fulfill requests from truly small businesses. Shake Shack announced it is returning the money afforded the company via the government relief.