Last week, we highlighted the expansion of the Paycheck Protection Program ("PPP"), made available through the Omnibus Appropriations Act, 2021 (“OAA”). In addition to the PPP expansion, the OAA also provides relief to some of the businesses hardest hit by the COVID-19 pandemic - those primarily involved with providing live entertainment, in addition to other forms of entertainment, such as movie theaters and museums. Specifically, the OAA allocates $15 billion in funding for Shuttered Venue Operator Grants ("SVO Grants") to these businesses that are of immeasurable importance to the fabric of our society.
[SIDE BAR: As a musician and lifelong patron of live shows, this topic is of particular interest to me...]
Here's what you need to know:
I. WHAT BUSINESSES MAY QUALIFY FOR THE SVO GRANT?
There are six categories of businesses that may qualify, if they meet certain criteria:
- Live Venue Operator or Promoter;
- Theatrical Producer;
- Live Performing Arts Organization Operator;
- A “Relevant” Museum Operator;
- Motion Picture Theater Operator; and
- Talent Representative
A business must meet EACH of the following requirements:
- was “fully operational” on February 29, 2020;
- “gross earned revenue” during a calendar quarter in 2020 fell by at least 25 percent from the same quarter in 2019; and
- The business has resumed or intends to resume its respective operations.
III. ARE THERE BUSINESSES THAT ARE DISQUALIFIED FROM RECEIVING A SVO GRANT?
Yes. Generally, a business is not eligible for a SVO Grant if it is itself, or majority-owned or controlled by:
- a publicly traded company; or
- an entity that has received more than 10% of its gross revenue from federal funding in 2019; or
- an entity that has two or more of the following characteristics:
- owns or operates businesses in more than one country;
- owns or operates venues or businesses in more than 10 states;
- employed more than 500 employees (full-time) as of February 29, 2020; and
- has received a PPP loan on or after December 27, 2020.
In addition, a business that is involved with live performances or displays of a prurient sexual nature are not eligible for a grant.
IV. ARE THERE OTHER REQUIREMENTS?
Yes. There are specific operational requirements, depending on the type of business seeking a grant. For example (not an exhaustive list):
- Venues for live events must meet prescribed criteria including a defined performance space, equipment, staff, marketing and, except for charitable events, must pay artists “fairly";
- A live venue operator or promoter, theatrical producer, or live performing arts organization operator must, as its primary business activity, organize, promote, produce, manage, or host live concerts, comedy shows, theatrical productions, or other events by performing artists and, for such activity, apply a cover charge and pay performers by formal agreement. There are also revenue thresholds in connection with certain activities that must be met;
- a "relevant museum" must not operate as a for-profit entity; and
- at least 70% of the operations of a talent representative must be involved with representing or managing artists and entertainers, including booking or representing musicians, comedians, actors, or similar performing artists primarily at live events.
V. WHAT IS THE AMOUNT OF THE SVO GRANT?The grant amount can be the lesser of:
- $10 million; or
- (i) if the entity was in operation as of January 1, 2019, 45 percent of its “gross earned revenue” in 2019, or (ii) if such person or entity was not in operation until after January 1, 2019, the amount equal to the average monthly “gross earned revenue” for each full month the entity was in operation during 2019, multiplied by six.
VI. WHEN WILL THE SVO GRANT BE AVAILABLE?
As of today, the SBA has not yet begun accepting applications for the SVO Grant. It is anticipated that the application process will be open any day now. When it is open, applications will be accepted on a prioritized basis:
- First-Priority Grants: During the initial 14-day period in which the SBA awards SVO Grants, only eligible businesses with a 90 percent or more loss in “revenue” during the nine-month period beginning on April 1, 2020, and ending on December 31, 2020, in comparison to the same period in 2019, are eligible to receive a grant.
- Second-Priority Grants: During the 14 days immediately after the initial 14-day period, only eligible businesses with a 70 percent or more revenue loss during the same nine-month period, are eligible to receive a grant.
- General: The above priority grants cannot exceed 80 percent of the initial $15 billion appropriated under the OAA. After the first 28 days of disbursement, the SBA may award a grant to any eligible person or entity.
In addition, during the first 60 days of the program, $2 billion of the appropriated funds are allocated for those eligible businesses with 50 or fewer full time employees.
VII. ANYTHING ELSE I NEED TO KNOW?
Yes. Generally, SVO Grant funds can only be used for certain expenses, such as payroll, covered rent, covered utilities, scheduled interest or principal on any covered mortgage obligation and other ordinary and necessary business expenses. SVO Grants may be used for costs incurred during the period beginning on March 1, 2020 and ending on December 31, 2021. Other specific requirements may apply.
VIII. WHAT DO I DO NOW?
Review this information and determine whether or not you believe you may be eligible for a SVO Grant. We will send an alert as soon as we learn that applications are being accepted.
In the meantime, if you have any questions, feel free to reach out.
For more information on SVO Grants, PPP Round 2 and related issues, contact Ron Rolleri at firstname.lastname@example.org.