Small Business Administration Announces Shuttered Venue Operators Grant (SVOG) Program

On April 8th, the Small Business Administration (SBA) launched a portal for its Shuttered Venue Operators Grant Application. (Note that as of the date of this blog being posted, the site has been temporarily suspended due to technical difficulties, but we encourage you to regularly check the SBA site, so you can submit your application online once the site is back up and running again). This grant program provides emergency assistance for eligible venues impacted by the COVID-19 pandemic. As many non-profits fall into this category, we would like to provide you a summary of SBA’s guidance regarding the program:

Which Non-Profits Are Eligible To Apply?

• Live venue operators
• Live performing arts organization operators
• Relevant museum operators, zoos and aquariums who meet specific criteria
• Motion picture theater operators

Additionally, organizations must have been in operation as of February 29, 2020. Note that if your organization has received a Paycheck Protection Program (PPP) loan on or after December 27, 2020, the eligible grant amount you receive through this program will be reduced by the amount of your PPP loan. However, under law, entities will be ineligible for a PPP loan AFTER they receive a SVOG. Any PPP borrower that received a PPP loan before December 27, 2020, however, will not have the PPP loan amount deducted from any subsequent SVOG.

What Are The Grant Amounts?

• 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.

How Will The Grants Be Prioritized?

1. First Priority (First 14 Days of Grant Awards): Entities that suffered a 90% or greater revenue loss between April 2020 through December 2020.
2. Second Priority (Next 14 Days of Grant Awards): Entities that suffered a 70% or greater revenue loss between April 2020 through December 2020.
3. Third Priority (Beginning 28 days after first and second priority awards are made): Entities that suffered a 25% or greater earned revenue loss between one quarter of 2019 and the corresponding quarter of 2020.
4. Supplemental Funding (Available after all Priority Periods have passed): Recipients of first, second, and third priority round awards who suffered a 70% or greater revenue loss for the most recent calendar quarter (as of April 1, 2021, or later).

What Are The Allowable Use of Funds?

Grant funds may be used to cover the following expenses:

• 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, or make contributions or other payments to, or on behalf of, political parties, political committees, or candidates for election.

What Recordkeeping Is The Grantee Responsible For?

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

For additional information, please refer to the SBA FAQ.