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Shuttered Venue Operator Grant Program’s Opening Delayed

Updated 4.8.2021
On April 8, 2021, the U.S. Small Business Administration was scheduled to start accepting applications to the Shuttered Venue Operators Grant (SVOG) program but had to shut-down due to systems issues. Since the program is first-come first-serve, the SBA stated that it would announce reopening of the application portal in advance to ensure equitable access.
The SVOG program is targeted to operators of live venues, live performing arts organizations, museums and movie theatres, as well as live venue promoters, theatrical producers and talent representatives. Eligible businesses may apply for critical economic relief, as they are some of the first that had to shutter their doors a year ago in response to the COVID-19 pandemic. For more information on how to apply, visit the SBA’s portal.

The SVOG program was created when the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260, was signed into law in late December. The Economic Aid Act appropriated $15 billion to the program, which is designed to provide eligible applicants with grants equal to 45% of their gross earned revenue, up to a maximum of $10 million.

The American Rescue Plan Act, P.L. 117-2, which became law March 11, appropriated an additional $1.25 billion to the SVOG, bringing the program’s funding to a total of $16.25 billion. More than $16 billion of the funding is set aside for grants.

The American Rescue Plan Act also amended the SVOG program so entities that apply for a Paycheck Protection Program (PPP) loan after Dec. 27, 2020, can also apply for an SVOG, with the eligible entity’s SVOG to be reduced by the PPP loan amount.

Here’s what live venue operators should know now if they are interested in these new grants.

Grant amount

Grant amounts will reflect either of the following instances:

  • For an eligible entity in operation on January 1, 2019, grants will be for an amount equal to 45% of their 2019 gross earned revenue OR $10 million, whichever is less.
  • For an eligible entity that began operation after January 1, 2019, grants will be for the average monthly gross earned revenue for each full month you were in operation during 2019 multiplied by six (6) OR $10 million, whichever is less.

.What businesses are eligible to apply for these grants

The SVO grant program will offer up funds to a specific set of businesses that operate live venues or serve a role in the performance arts industry. These companies must have been operating as of February 29, 2020.

Businesses that generally qualify include:

  • Live venue operators or promoters.
  • Theatrical producers.
  • Live performing arts organization operators.
  • Museum operators, zoos and aquariums that meet specific criteria.
  • Motion picture theater operators.
  • Talent representatives.

Any business that wants one of these grants must have an active government System of Award Management (SAM) account, so it’s crucial to sign up quickly at SAM.gov.

Eligible businesses should sign up for a SAM account immediately

Any business that wants one of these grants must have an active government System of Award Management (SAM) account, so it’s crucial to sign up quickly at SAM.gov. To sign up, you must first create a login.gov user account and then use that same login information to sign up for SAM. When you are registering for SAM, you will also need to provide the following data that should be tied to your business:

  • Dun & Bradstreet DUNS number: Acquiring a DUNS number is free and typically takes one to two business days to process. You can get the DUNS number free here.
  • Tax Id Number (TIN) and Taxpayer Name: A TIN will typically be either your Employer ID Number (EIN) or Social Security Number (SSN), depending on what type of business you own. It’s possible your Taxpayer Name is not the same as your legal business name, so be sure to double-check this.
  • A CAGE or NCAGE number: If you already have a CAGE/NCAGE number, you are all set. If you don’t have one, you’ll automatically be assigned your SAM.gov registration is finished.
  • A NAICS code: This code identifies what industry your business serves. You can look up NAICS codes here.
  • Electronic Funds Transfer (EFT) Information: You’ll need to provide your bank routing and account numbers to receive funds.
It’s strongly advised to get a SAM account functional swiftly to speed up the SVO grant application process.

Grant priorities

The SVO grant funds will be disbursed to applicants in the order of those who have been hit hardest first and those that were hurt the least later. For example, the first 14 days of distribution will be prioritized for “entities that suffered a 90% or greater revenue loss between April 2020 through December 2020 due to the COVID-19 pandemic.” The second 14 days will be focused on entities that suffered a 70% or greater revenue loss during that same time period. And so on.

Businesses can take both PPP loans and venue grants

The SVO grant program initially barred prospective applicants from receiving both PPP loans and SVO grants. However, the American Rescue Plan Act (ARPA) amended this provision and now businesses can apply for first- and second-draw PPP loans prior to applying for SVO grants. However, any venues that receive a SVO grant will be ineligible to receive a new PPP loan after the grant is issued. If a company seeking an SVO grant receives a PPP loan on or after December 27, 2020, then they will have the PPP loan deducted from the SVO grant total.

For example, if a performing arts theater received a $20,000 PPP loan in January 2021 and is approved for an SVO grant of $100,000 in April 2021, the grant will only be worth $80,000. If a company was able to get a PPP loan before December 27, 2020, their grant will not be reduced by that amount.

Allowable use of funds

Funds may be used for specific expenses, which include:

  • Payroll costs
  • Rent payments
  • Utility payments
  • Scheduled mortgage payments (not including prepayment of principal)
  • Scheduled debt payments (not including prepayment of principal on any indebtedness incurred in the ordinary course of business prior to February 15, 2020)
  • Worker protection expenditures
  • Payments to independent contractors (not to exceed $100,000 in annual compensation per contractor)
  • Other ordinary and necessary business expenses, including maintenance costs
  • Administrative costs (including fees and licensing)
  • State and local taxes and fees
  • Operating leases in effect as of February 15, 2020
  • Insurance payments
  • Advertising, production transportation, and capital expenditures related to producing a theatrical or live performing arts production. (May not be primary use of funds)

Grantees may not use award funds to:

  • Buy real estate
  • Make payments on loans originated after February 15, 2020
  • Make investments or loans
  • Make contributions or other payments to, or on behalf of, political parties, political committees, or candidates for election
  • Any other use prohibited by the Administrator

Grantee recordkeeping

Grantees will be required to maintain documentation demonstrating their compliance with the eligibility and other requirements of the SVOG program. They must retain employment records for four years following their receipt of a grant and retain all other records for three years.

Questions

Please contact your Warady & Davis LLP advisor with your questions at 847-267-9600; info@waradydavis.com.  For more information about SVO grants, the SBA has created a helpful FAQ sheet that outlines program information in detail.

You can also visit the Warady & Davis LLP COVID-19 Resource Center for a wealth of information on stimulus assistance, new legislation and much more.  This information is updated regularly.

 

SOURCE:  SBA

 

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