CHICAGO — Cook County has pulled the plug on one of its federally funded small business grant programs after being sued over its constitutionality.
The suit, filed in December on behalf of Chicago chiropractor Domenic Cusano Jr., alleged the Small Business Source Grow Grant program treated applicants “differently based on their owners’ race, and specifically prioritizes ‘persons of color.’ ”
The lawsuit claimed that was a violation of the equal protection clause of the 14th Amendment, “discriminating against individuals on the basis of their membership in a racial group,” and that Cusano, who “identifies as white and Caucasian,” would not be “on equal footing” with other applicants. The suit was filed by the California-based law firm Pacific Legal Foundation, which “defends Americans’ liberties when threatened by government overreach and abuse,” according to its website.
“Litigation was recently filed against the County regarding the Cook County Grow Grant program,” the program website says. “In order to assist small businesses as quickly as possible, we have chosen to rescind the Grow Grant program and restructure and redesign our small business grant program.”
“It is wrong for the government to grant preferential treatment based on race,” Andrew Quinio, an attorney at Pacific Legal Foundation, said in a release when the case was filed. “The government is attempting to pick winners and losers based on race, in utter disregard for the Constitution. The 14th Amendment protects individuals from discrimination due to arbitrary classifications like race.”
Grow Grant was announced in late September. Using funding from the federal COVID-19 American Rescue Plan Act, it was slated to award $71 million in grants to small businesses in early 2023. The county’s Bureau of Economic Development planned to provide $10,000 grants “paired with one-on-one business advising to historically excluded businesses — including those owned by entrepreneurs of color, women, veterans, LGBQT+ and persons with a disability — to close racial wealth and opportunity gaps,” according to a county release.
Applicants had to be a for-profit business in Cook County with fewer than 20 employees, in operation prior to the pandemic and have “experienced a decrease in revenue or gross receipts, increased costs, or greater financial insecurity due to COVID.” Applicants were asked to mark their ethnicity, race, and whether the business was at least 51% minority-owned, operated, and controlled. The program’s pause was first reported by Cook County Record.
“There were no restrictions on applicants,” Nick Mathiowdis, a spokesman for Preckwinkle, told the Tribune in an email. “Any business that met the eligibility criteria below and submitted their application with all the correct documentation would have been considered.”
The application also noted that “historically excluded populations” would be prioritized, however.
Cusano’s complaint asked that the county be permanently barred “from enforcing” the program’s prioritization of minority business owners, pay for attorneys’ fees and $1 in damages.
The 22,000 individuals who applied for help in October have been in limbo since, WBBM-Ch. 2 reported earlier this month. County officials plan to launch a larger program in the coming months, but business owners will have to apply again.
“We decided to rescind, restructure and refine the program to try to get the money out to small business as quickly as possible … rather than trying to litigate it,” Preckwinkle said at a news conference Thursday following the County Board’s monthly meeting.
Cusano could not be reached for comment Friday, but Quinio, his attorney, released a statement saying it’s “encouraging that the county has backed off from its discriminatory program. We look forward to all small business owners getting a fair and equal shot at receiving assistance without regard to their skin color. The county should never use a crisis to violate the constitution.”
Asked whether the county had concerns about whether the program could be considered discriminatory when it was released, Laura Lechowicz Felicione, special counsel for Preckwinkle’s office, said “we believe we had strong arguments, based upon the individuals and communities that were hardest hit by COVID. We were comfortable when we structured and issued the grant, but based upon the litigation, to fight that out in the courts could take some time.”
“We’ll be working with our grant subrecipient and referral partners to restructure the grant,” Lechowicz Felicione continued. “We’ll be looking at probably qualified census tracts” and bringing a revised program back to the county board for approval in “late spring or early summer.”
“Any and all business information contained in a submitted Grow Grant application will remain confidential and secure,” Mathiowdis said. The revamped grant program will “include additional funds” unspent from the county’s $1 billion ARP distribution. “Businesses that had applied previously will have to reapply but may not have to resubmit documents provided previously.”
Preckwinkle encouraged businesses to visit the Cook County Small Business Source’s website, which offers events and business advising sessions.