Congress enacted the Shuttered Venue Operator's Grant ("SVOG") as part of the Economic Aid Act which was signed into law on December 27, 2020. The SVOG provides grants specifically to live venue operators that were in business as of February 29, 2020.
Who is Eligible for a Grant?
The following businesses and their subsidiaries are eligible to apply for the SVOG; operators, promotors, theatrical producers, live performing arts organization operators, museum operators, motion picture theater operators, and talent representatives. Additionally, museums that are owned by state or local governmental agencies are eligible provided they act solely as a live venue operator.
Entities not in operation in 2019 may qualify for an SVOG if their gross earned revenues for the second, third, or fourth quarter of 2020 demonstrate a reduction of not less than 25% from their gross earned revenues from the first quarter of 2020.
Other requirements for eligibly are;
- the venue must be fixed it cannot be a traveling venue;
- seating, whether indoor or outdoor, must be fixed and there cannot be a "multipurpose" room in the venue;
- operations must primarily be in the United States, pay US taxes, employee US labor, and use material and products made in the United States;
- the entity cannot be publicly traded or majority owned by a publicly traded company;
- the entity cannot promote live sex acts;
- no more than 10% of its 2019 funding was from a government source,
- the entity cannot own or operate in more than one country, or more than 10 states and it cannot have had more than 500 employees as of Feb. 29, 2020.
How much is the grant?
Entities are eligible for either:
- 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 revenue for each full month you were in operation during 2019 multiplied by six (6) OR $10 million, whichever is less.
PPP Loans and SVOG
An entity that obtained a PPP Loan prior to December 27, 2020 is eligible for the SVOG, and an entity that applied for a first or second draw PPP loan after December 27, 2020 and was declined is eligible for the SVOG. But an entity that applied and was approved for a first or second draw PPP loan after December 27, 2020 is not eligible for the SVOG. Furthermore, an entity cannot apply for a PPP Loan and SVOG at the same time.
Before you Apply
The SBA advises that applicants register for a DUNS number so that they can register in the System for Award Management (SAM.gov). All applicants need a SAM no. A TIN, social security number, or EIN identifiers cannot be used to apply for the SVOG.
Use of Grant Funds
Funds may be used for specific expenses, which include: (i) payroll costs, (ii) rent payments, (iii) utility payments, (iv) scheduled mortgage payments (not including prepayment of principal), (v) scheduled debt payments (not including prepayment of principal) on any indebtedness incurred in the ordinary course of business prior to 02-15-20), (vi) worker protection expenditures, (vii)payments to independent contractors (not to exceed $100K in annual compensation per contractor), (viii) other ordinary and necessary business expenses, including maintenance costs, administrative costs (incl. fees and licensing), (ix) state and local taxes and fees, (x) operating leases in effect as of 02-15-20, (xi) insurance payments, (xii) advertising, production transportation, and capital expenditures related to producing a theatrical or live performing arts production. (May not be primary use of funds.)
Payment to independent contractors is a permissible use of SVOG funds, however, the independent contractors must work directly for the entity, they cannot be a subsidiary or secondary service provider.
Determining an Entity's Number of Employees
Employees that work at least 30 hours per week are considered full-time. Employees that work between 10-29 hours per week are considered one-half of a full-time employee. Employees that work less than 10 hours per week are not considered an employee. Once the qualifying employees are determined, an entity calculates the average number of employees it had over the prior year by adding up the number of qualifying employees in each individual pay period and dividing that amount by the number of pay periods in that year.
Assume an entity paid its employees monthly and had the following number of qualifying employees each pay period:
Jan – 7.5 full-time employees Jul – 10 full-time employees
Feb – 6 full-time employees Aug – 10 full-time employees
Mar – 9.5 full-time employees Sep – 7 full-time employees
Apr – 8 full-time employees Oct – 8.5 full-time employees
May – 9.5 full-time employees Nov – 7 full-time employees
Jun – 8.5 full-time employees Dec – 6 full-time employees
The sum of the firm's full-time employees is 97.5. The firm would then divide 97.5 by 12 (the number of pay periods) to determine its average number of full-time employees was eight.
What is Included in Revenue When Calculating the Grant Amount?
The SBA defines earned revenue and gross earned revenue according to the common principals of the accrual method of accounting. Monies entities receive from the sale of goods or services such as admission tickets, merchandise, food and beverages, advertising sales, and long and short-term rentals are earned revenue. Gross earned revenue is the total of earned revenue and contracted presentation income. Unearned revenue, coming from donations, such as foundation grants, corporate sponsorships and individual gifts, should not be included in either earned revenue or gross earned revenue.
Only the parent must meet the eligibility requirements to qualify for the SVOG, not each individual subsidiary, but the number is limited to 5 per SVOG.
First Priority- 1st 14 days of grant awards
Entities that suffered a 90% or greater revenue loss between April 2020 through December 2020 due to the COVID-19 pandemic.
Second Priority- Next 14 days of grant awards
Entities that suffered a 70% or greater revenue loss between April 2020 through December 2020 due to the COVID-19 pandemic.
Third Priority- Beginning 28 days after First & Second Priority Awards are made
Entities that suffered a 25% or greater revenue loss between one quarter of 2019 and the corresponding quarter of 2020.
Supplemental Funding- Recipients of First and Second Priority round who suffered a 70% or greater revenue loss for the most recent calendar quarter (as of 04-01-21 or later)
Available after First & Second Priority