Shuttered Venue Operators Grants Program – Q&A From Joshua A. DeCuir

04/04/2021

 

A Q&A on the Application of the $16 Billion Shuttered Venue Operators Grants Program

By Joshua A. DeCuir, Jones Walker LLP

What is the $16 billion Shuttered Venue Operators Grant Program?

The COVID-19 relief package enacted on December 27, 2020, the Consolidated Appropriations Act, 2021, appropriated $15 billion to fund the Shuttered Venue Operators Grant Program (SVOG). An additional $1 billion was added to the program as a part of the American Rescue Plan, which was signed by President Biden in March 2021. The Small Business Administration (SBA) will disburse these funds as grants to qualifying live theatre operators or promoters, theatrical producers, live performing arts organizations, museums, motion picture theatre operators, and talent representatives (Venues). A venue may use the grant proceeds to cover eligible expenses incurred between March 1, 2020, and December 31, 2021. The SBA has not yet begun accepting applications for the SVOG, but it has issued several FAQs setting forth more details regarding the program.

The SVOG application process opens on April 8. What are some key tips for venue operators to consider when filling out the application that will help them stand apart from other venue operators applying for the same grant?

Potential applicants should become very familiar with several resources available on the SVOG website. In addition to the FAQs mentioned previously, the SBA has posted a Preliminary Application Checklist that details the various required documents that must be submitted by applicants. It is a useful and essential resource.

The SBA hosted a webinar on March 30, 2021 for potential applicants that detailed the various requirements for applying and answered many questions submitted by potential applicants. A recording of this webinar can be found at this link.

Finally, in anticipation of applications opening on April 8, there are a couple critical actions that applicants should take:

  • Sign up on the application portal – This will automatically notify applicants when the portal goes live.
  • Register with the System for Award Management (SAM) – This is required of applicants, and to do so, a Dunn and Bradstreet, or DUNS, number is needed.

These are steps that should be taken now to avoid any delay in applying after April 8. The SBA has posted a series of video tutorials on its website that can help familiarize applicants with these steps.

Are there any potential pitfalls within the fund rules that venue operators should be aware of when applying for the grant?

I believe the biggest pitfall facing potential applicants is a clear understanding of the program requirements. The requirements vary and depend on the particular type of applicant, so an applicant should be crystal clear about the eligibility and application requirements depending on the type of entity or person applying. An easy to use “cheat sheet” chart, which details the various requirements broken down by applicant type, is posted on the SBA’s website. All applicants should become familiar with this chart!

When does the application process close and when will venue operators be told whether their application was accepted?

There is not a deadline to apply. The SBA will accept applications on a rolling basis until the full amount of the $16 billion appropriated to the program is awarded. The SBA has not issued any specific guidance with respect to how long it will take to review applications. However, the SBA must review submitted applications according to the statutorily-defined Priority Periods. For the first 14 days, beginning on April 8, applications with at least a 90% reduction in revenue between April 2020 and December 2020 will be prioritized. Following that, in the second Priority Period, applicants with between a 90% and 70% reduction in revenue between April 2020 and December 2020 will be prioritized. The SBA states that “gross revenue” will be the relevant measure for priority review. After this second Priority Period, applicants with at least 25% in earned revenue between any quarter in 2020 and the prior quarter in 2019 will be reviewed.

Finally, the SBA has stated that its decision to deny an application cannot be appealed or reconsidered in keeping with its practice of not allowing such appeals in similar grant programs. 

Are there specific activities that the funds must be used for?

Funds distributed by the grant program must be used by eligible recipients for at least one of the following purposes:

  • Payroll costs
  • Principal or interest payments on covered mortgage obligations
  • Covered rent payments
  • Covered utility payments
  • Principal or interest payments on indebtedness or debt instruments incurred in the ordinary course of business prior to February 5, 2020
  • Covered expenses associated with protecting workers from exposure to the novel coronavirus
  • Payments to independent contractors up to $100,000 in annual compensation
  • Other ordinary and necessary business expenses, including maintenance and administrative costs or fees, state and local taxes, payments under insurance policies, or expenses in promoting or producing live theatrical performances

The terms “payroll costs,” “covered mortgage obligation,” “covered rent obligation,” “covered utility payment,” and “covered worker protection expenditure” have the same meanings as the terms under the PPP set forth in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

A couple of other things to keep in mind. First, to be eligible, costs or expenses must have been incurred after March 1, 2020, but before December 31, 2021. Also, a grant recipient must use all of the funds within one (1) year of the date the grant is disbursed. Any unused funds after this period must be returned to the SBA. 

What overall economic impact do you imagine the SVOG will have on the entertainment industry? 

I’m sure many potential applicants for an SVOG would have welcomed this targeted fund a year ago, so let’s hope that it’s not too late! I’m curious to see the number of applications that will be submitted when the SVOG Application Portal opens on April 8. A large volume of applications will likely indicate that the funds will have a big impact on these struggling venues and related operators and promoters.