Trump admin proposal a last-ditch effort to offer religious groups SBA loans

Washington D.C., Jan 21, 2021 / 14:34 pm

A proposal made on the last day of the Trump administration would make religious businesses eligible to receive loans from the Small Business Administration, removing previous restrictions.

The U.S. Small Business Administration published a proposal Jan 19. that would remove five restrictions that "run afoul of the Free Exercise Clause of the First Amendment. All five provisions make certain faith-based organizations ineligible to participate in certain SBA business loan and disaster assistance programs because of their religious status," the proposal's summary states.

"Because the provisions exclude a class of potential participants based solely on their religious status, the provisions violate the Free Exercise Clause of the First Amendment. SBA now proposes to remove the provisions to ensure in its business loan and disaster assistance programs the equal treatment for faith-based organizations that the Constitution requires," the summary adds.

If passed, the proposal would allow religious businesses to qualify for SBA loans, though it is unclear if it would also allow churches and other houses of worship also to be eligible, the Washington Post reported.

The SBA proposal cites two Supreme Court cases as precedent for removing the religious exclusions from SBA loan qualification criteria.

In Trinity Lutheran Church of Columbia, Inc. v. Comer the Supreme Court ruled that a playground resurfacing grant that excluded churches and religious organizations was unconstitutional. The court said the grant violated the Free Exercise Clause, which "`protect[s] religious observers against unequal treatment' and subjects to the strictest scrutiny laws that target the religious for `special disabilities' based on their `religious status.' "

In Espinoza v. Montana Department of Revenue, the Supreme Court repealed a state court decision to block religious schools from a scholarship program. While the state argued that it had an interest in preventing the religious use of the funds, the Supreme Court ruled that "Status-based discrimination remains status based even if one of its goals or effects is preventing religious organizations from putting aid to religious uses." The SBA also noted that its proposal also follows the 2017 executive order from President Trump entitled Promoting Free Speech and Religious Liberty. The order stated that "Federal law protects the freedom of Americans and their organizations to exercise religion and participate fully in civic life without undue interference by the Federal Government" and added that the executive branch would enforce such protections. Furthermore, the removal of religious restrictions also follows a decision by the Trump administration to allow religious organizations to apply for the Payment Protection Program, a coronavirus relief program that provided billions of dollars in pandemic relief to businesses and non-profits, including thousands of Catholic parishes, schools, and other religious organizations.

The proposal is likely to spark a heated debate about religious freedom under the Biden administration. While the Free Exercise Clause of First Amendment ensures the free practice of religion, the Establishment Clause prohibits the US Congress establishing a religion by law.

The SBA is collecting public comment on the proposal until Feb. 18. Afterward, the Washington Post reports, the determination of the proposal's future falls to Biden-appointed administrator Isabel Guzman.