January 15, 2021
The persistence of the COVID-19 pandemic has created financial challenges for businesses and organizations in a variety of industries. The restrictive government orders designed to minimize virus transmission have been difficult for some to navigate. It has been somewhat easier for those who can shift to a remote work format, but for live theatres, musical productions, concerts, zoos, cinemas, and others, the impact has been devastating. Ticket sales flat-lined overnight and while some have turned to modified programs to captivate the audience, the financial stress is overwhelming. The good news is that Congress delivered desperately needed relief through the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act in the form of a new $15B grant program. The Shuttered Venue Operators Grant (SVO) program provides immediate assistance to the hardest-hit venues. Although formal program information has yet to be released, there is important program information currently available. To help clients, prospects, and others, Wilson Lewis has provided a summary of key details below.
As outlined by the Small Business Administration (SBA), only certain venue operators and supporting businesses are eligible to participate in the program. They include live venue operators or promoters, theatrical producers, live performing arts organization operators, certain museums, zoos and aquariums, motion picture cinemas, and talent representatives. In addition to business type, only those in business on, or before, February 29, 2020, and did not receive a Paycheck Protection Program (PPP) loan after December 27, 2020, are eligible to participate.
The grant amounts vary based on whether an entity was in business on January 1, 2019, or commenced operations after this date. For those in operation on January 1, 2019, the grant value is equal to the lesser amount of 45% of 2019 gross earned revenue, or $10M. For those in operation after January 1, 2019, the value is the lesser of the average monthly gross revenue for each full month in operation during 2019 multiplied by 6, or $10M.
The SVO has specific guidelines on how the grant must be spent by awarded entities. This includes payroll costs, rent, utility, mortgage interest, and scheduled debt payments, worker protection costs, payments to independent contractors (not to exceed $100,000 per year), and administrative expenses. In addition, ordinary expenses (including maintenance), insurance payments, advertising, production transportation, and capital expenditures related to production are permitted. It is important to note that grantees may not use funds to purchase real estate, make investments or loans, or make contributions or payments on behalf of political parties, committees, or candidates
The application process has not yet started because the SBA has not released the application or related instructions. However, the process will be tiered to allow those with 50 employees or less, and in the greatest need to receive consideration first.
Grant recipients are required to maintain documentation that demonstrates compliance with eligibility and other terms and conditions of the SVO program. Relevant employment records must be maintained for 4 years following grant issuance and all other relevant information for 3 years.
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The relief offered in the grant program will provide a financial lifeline to those venue operators struggling to manage through the pandemic. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call us at770-476-1004 or click here to contact us. We look forward to speaking with you soon.