The Shuttered Venue Operators Grant portal is reopening
The SBA initially opened its Shuttered Venue Operators Grant (“SVOG”) portal on April 8, 2021. Applicants experienced difficulty uploading application documents and the SBA closed the portal for repairs. The SBA has not announced a definitive date for restarting the portal that allows applicants to apply for the Shuttered Venue Operators Grant funds, but is expecting the portal to reopen by the end of the week of April 18, 2021. During this period potential applicants should evaluate their ability to generate liquidity using the SVOG program and ready themselves to apply for the grant money once the portal is open and operating.
The Shuttered Venue Operators Grant program was created under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act in December of 2020 with $15 billion of funding. The March 2021 American Rescue Plan Act added an addition $1.25 billion to the SVOG program resulting in a total program allocation of $16.25 billion.
Eligibility is defined as live performing arts organizations, museums, movie theaters, live venue promoters, theatrical producers and talent representatives. The entity had to be fully operational on February 29, 2020 and needs to show at least a 25% reduction in gross revenue over one quarter of 2020 compared to the same quarter in 2019. An applicant has to be operating in the US, have fewer than 500 full time equivalent employees as of February 29, 2020, and operate in ten or fewer states. To be eligible, the applicant cannot have received more than 10% of its 2019 gross revenue from federal funding sources, excluding funds receive under the Robert T Stafford Disaster Relief and Emergency Assistance Act.
There are other specific requirements by type of operator, and those can be found by clicking here or at this link below:
The SVOG funds cap is $10 million. The grant amount for an eligible entity in operation on January 1, 2019 would be equal to 45% of 2019 revenue or $10 million, whichever is less. If the eligible entity began operations after January 1, 2019, the grant amount will be the lesser of the average monthly gross revenue for each full month of operations in 2019 multiplied by six, or $10 million.
Funds will need to be used within one year of receipt if the grant was received under the initial phase of the SVOG program. The entity will have eighteen months to use funds if the grant was received under the Supplemental Phase program of the SVOG, with the eighteen months beginning with receipt of the initial phase funding. At the end of the period, funds not expended for eligible purposes will need to be refunded.
If the calculated grant amount is $1 million or less, the SBA plans to disburse the grant in one or two payments. If the amount is over $1 million, the SBA will disburse in two to four installments based on timing of receipt of required information, such as the 2020 tax return.
Eligible expenses must be incurred between March 1, 2020 and December 31, 2021 for an initial phase funding, and between March 1, 2020 and March 31, 2022 if the funding occurs under the Supplemental Phase program. Sample eligible expense categories include:
Customer refunds for cancelled performances.
Reimbursement of personal funds owners put into the applicant to keep it in operation.
Owner compensation, not exceeding what was earned in 2019.
Payments on debts incurred prior to February 15, 2020.
Real estate and personal property taxes.
Certain payroll expenses.
Certain depreciation expenses.
Artist deposits and guarantees.
What should a special venues operator do now?
There are many nuances to the Shuttered Venue Operators Grant program and we encourage any operator in this sector to fully investigate eligibility. For example, there are situations where an entity with more than 500 employees could be eligible, and there are situations where start-ups not operating in 2019 are eligible for funds. This is a complex program but because it is a grant, not a loan, investing time to determine eligibility and calculating the ability to use the grant funds for allowed purposes should be undertaken by any entity operating is this sector.
If an operator believes they are eligible for the SVOG program, the SBA has published a list of required application materials. That list is available by clicking here or by clicking the link below:
While the portal is being updated, and if there are further delays in the application process, assessing eligibility and assembling application materials would be excellent next steps for entities in this sector.