SBA Loan Funding Is Dry for Rick’s Cabaret Clubs

LAS VEGAS — The parent company of Rick’s Cabaret said that while its mainstream Bombshells Restaurant & Bar division received $4.2 million under the CARES Act’s Paycheck Protection Program, its numerous adult nightclubs received zero funding. So far, adult businesses have had mixed results with obtaining funds under the program because of a Small Business Administration rule that excludes companies that offer performances or sell products of a “prurient sexual nature.” One brothel operator in Nevada says she has been given approval for funds, while several strip clubs in the Midwest have had to go to court to receive the green light to even apply for the loans.  For Rick’s Cabaret’s parent, RCI Hospitality Holdings Inc., the lack of a loan program during the pandemic is substantial because it operates more than 40 clubs in New York, Miami, Charlotte, Dallas, Chicago, Pittsburgh, Houston, Minneapolis, St. Louis and other markets under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars, Tootsie’s Cabaret and Scarlett’s Cabaret. Last month, RCI furloughed more than 1,900 employees after the pandemic forced stay-at-home directives. The company also said that it reduced pay of about 100 remaining employees to 75 percent of previous levels. RCI, however, was able to receive $1.1 million in PPP assistance for its “shared-services” division, the company said in a SEC filing last week. The company also said it is filing business interruption insurance claims because of the pandemic. “We do not know the extent and duration of the impact of COVID-19 on our businesses due to the uncertainty about the spread of the virus,” the company said. “Lower sales, as caused by social distancing guidelines, could lead to adverse financial results. However, we will continually monitor and evaluate our cash flow situation and will determine any further measures to be instituted.” The company said that, to date, it has re-opened 10 company locations in Texas that are adhering to a 25-percent occupancy requirement. RCI was founded in 1983 by Robert Watters, who introduced the “Rick’s Cabaret gentlemen’s club concept,” according to the company. Several years ago, the company added its Bombshells restaurants — eight, all in Texas — that offer alcoholic drinks and dining served by scantily clad waitresses.

written by: Rhett Pardon

source: SBA Loan Funding Is Dry for Rick’s Cabaret Clubs | AVN

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