The Consolidated Appropriations Act offers grants to Shuttered Venue Operators SVOs to offer relief to performing arts venues, movie theaters, and museums.
This $15 billion grant program offers grants up to $10 million to eligible organizations. Applicants may qualify for grants equal to 45% of their gross earned revenue with a $10 million max. $2 billion SVO grants have been reserved for eligible applicants with 50 full-time employees or less.
Grant Awards for SVOs
Grant amounts are based on three scenarios according to the SBA: “(1) 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. Or (2) For an eligible entity that began operation after January 1, 2019, grants will be for the average monthly gross revenue for each full month you were in operation during 2019 multiplied by six (6) OR $10 million, whichever is less. Or(3) revenue for the first quarter of 2021 is 30% or less of the revenue for the first quarter of 2019, a supplemental grant of 50% of the initial grant may be received.”
Applications will be processed and awarded on a 14-day cycle on a three-tiered priority basis with an opportunity for supplemental funding for first and second tier applicants. According to the SBA, “During the first 59 days of opening the SVO Grants, SBA will reserve no less than $2 billion of program funding for grants to entities that have no more than 50 employees.”
On the first 14 days of the program, First Priority entities will be awarded grants. These entities suffered a 90% or greater revenue loss between April 2020 through December 2020. During the next 14 days, Second Priority entities will be awarded. These entities suffered a 70% or greater revenue loss between April 2020 through December 2020. Third Priority entities that suffered a 25% or greater revenue loss between one quarter of 2019 and the corresponding quarter of 2020 will be awarded after the first 28 days of the program. Supplemental Funding will be available after day 28 for recipients of the First and Second Priority tiers who suffered a 70% or greater revenue loss for the most recent calendar quarter.
Amounts received under grant may be used for costs incurred during the period 03/01/2020 – 12/31/2021. Amounts received under the supplemental grants may be extended to costs incurred 03/01/2020 – 06/30/2022.
Who is Eligible for an SVO Grant?
Eligible applicants include talent agents/representatives, live event venues and promoters, movie theater operators, live performing arts events (playhouses or ballet house), and some zoos, museums, and aquariums. The person or entity must have been fully operational by February 29, 2020, experienced a 25% decline in gross earned revenue during at least one quarter of 2020 compared to the same quarter in 2019, and continued operations or plans to continue operations at the time of application.
- Talent Agents who book or represent musicians, comedians, or actors at live events and 70% of operating costs must represent talent paid on ticket revenue (not tips). Agents may be for-profit, nonprofit, or government-owned.
- Venue operators or promotors, theatrical producers, or live performing arts organization operators may be for-profit, nonprofit, or government-owned entities. An additional requirement is the venue or promoter must not have received a PPP loan on or after December 27, 2020.
- Movie theater operators may be for-profit, nonprofit, or government-owned entities. The primary business activity must be ownership or operation of at least one location to show movies to patrons for a fee.
- Museums are eligible if they operate a public, tribal, or private nonprofit agency or institution organized permanently for education, cultural heritage, or aesthetic purposes.
The SVO grants offer the following
- The grant program has a $10 million cap
- The money may be used towards a more liberal list of allowable expenses compared to the spending guidelines of PPP funds
- It does not have to be repaid.
PPP loan program allows applicants to receive 2.5 times their monthly payroll costs, while SVO grants offer applicants 45% of their 2019 revenue. PPP loan funds must spend 60% of their loan on payroll costs and excludes independent contractors.
Allowable Expenses for SVOs
The all expenses list from the SBA for SVO grant spending is:
- 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 02-15-20)
- Worker protection expenditures
- Payments to independent contractors (not to exceed $100K in annual compensation per contractor)
- Other ordinary and necessary business expenses, including maintenance costs
- Administrative costs (incl. fees and licensing)
- State and local taxes and fees
- Operating leases in effect as of 02-15-20
- 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.).
At the time of this blog, entities need to choose whether to take the SVO route or the PPP Loan route; more details on eligibility are forthcoming, and the application is not yet available.
We will continue to provide additional updates regarding The Consolidated Appropriations Act, PPP loans, and PPP loan forgiveness. There is a lot of available information available to assist taxpayers experiencing COVID-19 related financial difficulties to be aware of these options and get assistance. Contact us today to review your options.
Zachary Pivirotto is an Audit Manager at Wilke & Associates, CPAs. His background includes preparing individual tax returns, performing benefit and pension plan audits for unions, and compiling financial statements. Zach is a CPA candidate and is currently pursuing his MBA from Joseph M. Katz Graduate School of Business.