Billions of dollars are coming online to help entertainment and cultural venues long-shuttered by the COVID-19 pandemic.
In all, $16 billion is available from two relief packages, one enacted last December included $15 billion in the Save Our Stages Act, and the other $1 billion coming from the American Rescue Plan, signed by President Joe Biden in March 2021.
The Brookings Institute estimates creative industries nationwide lost 2.7 million jobs and more than $150 billion in sales of goods and services. Of the 50 states, Brookings’ analysis said California and Los Angeles, in particular, would be hit hardest in terms of absolute losses for creative industries and occupations. The study estimates the state lost 453,332 creative jobs and $43.1 billion in related sales.
Celebrities including Dave Grohl with the Foo Fighters last year praised U.S. lawmakers for helping bail out the dormant entertainment industry.
“The preservation of America’s smaller, independent venues is not only crucial to the millions of concert-goers whose lives are bettered by experiencing their favorite artists in the flesh, but to the future of music itself, as it gives the next generation of young musicians a place to cut their teeth, hone their craft, and grow into the voices of tomorrow,” Grohl wrote in late December.
More than a year into the pandemic, money for these venues is finally coming online — with one small but critical catch.
The Shuttered Venue Operators Grant portal opened April 8 and promptly crashed. The Small Business Administration, which is administering the money, said it was working to get it back online.
“SBA is still working to determine an exact reopening date for the Shuttered Venue Operators Grant application portal. As soon as it is confirmed, we will provide advance notice,” the SVOG website states.
While the SBA figures out how to get the portal back online, here are some SVOG tips and insight provided by Joshua A. DeCuir, an attorney at Jones Walker LLP.
Q: Who qualifies for SBOG and what period does it cover?
A: Venues include live theatre operators or promoters, theatrical producers, live performing arts organizations, museums, motion picture theatre operators and talent representatives.
A venue can use the grant money to cover certain expenses incurred between March 1, 2020, and December 31, 2021. Grants can equal to 45% of gross revenue from 2019 with a cap of $10 million per entity.
Q: What should applicants know first about SVOG?
A: Applicants should become very familiar with several resources available on the SVOG website. In addition to FAQs, the SBA has posted an application checklist that details the various documents that must be submitted by applicants. The agency also has an easy-to-use “cheat sheet” chart, detailing the various requirements broken down by applicant type.
There are a couple of critical actions that applicants should take:
- Sign up on the application portal so you automatically get notifications. (This still works even though the application portal is offline.)
- Register with the System for Award Management, which is required of applicants. To do so, a Dunn and Bradstreet number, or DUNS, is needed.
Q: Do you see any potential pitfalls or rules that venue operators should be aware of when applying for the grant?
A: The biggest pitfall is a clear understanding of the 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.
Q: When does the application process close and when will venue operators be told whether their application was accepted?
A: There is no deadline to apply, and the SBA said it will accept applications on a rolling basis until the $16 billion is awarded to venues.
The SBA also has not issued any specific guidance with respect to how long it will take to review applications. For the first 14 days, applications with at least a 90% reduction in revenue between April 2020 and December 2020 will be prioritized. In the second priority period, applicants with between a 90%-70% reduction in revenue between April 2020 and December 2020 will be prioritized.
The SBA says 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.
The SBA has also said its decision to deny an application cannot be appealed or reconsidered, a standard procedure for its grant programs.
Q: Are there specific activities the grant money must be used for?
A: Funds distributed by SVOG must be used by eligible recipients for at least one of the following eligible purposes:
- Payroll costs
- Principal or interest payments on covered mortgage obligations
- Rent payments
- Utility payments
- Principal or interest payments on indebtedness or debt instruments incurred in the ordinary course of business prior to Feb. 5, 2020
- 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 such as maintenance and administrative costs or fees, state and local taxes, etc.
Recipients must use all of the funds within one year of the date the grant is disbursed. Any unused funds after this period must be returned to the SBA.
Q: What overall economic impact do you imagine the SVOG will have on the entertainment industry?
A: I’m sure many potential applicants for an SVOG would have welcomed this money 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. 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.
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