The COVID-19 pandemic has been tough on every single facet of American business, especially those that rely on large gatherings. Museums, music venues, concert halls, and movie theaters have all been hit especially hard during the shutdowns. Many of us plan our weekends, vacations, and leisure time around events and activities that take place in a public setting. They give us a reason to go out into our communities. While restrictions have been easing up, the consequences of having been closed have been devastating to many venues.
In late April the United States Small Business Administration (SBA) announced the Shuttered Venue Operators Grant (SVOG).
SVOG in a nutshell
The SVOG is a targeted amount of funding intended to specifically target live venues and businesses tied to live venue operation. The SVOG itself is a pool of funding that adds up to $15 billion dollars. This amount was increased by $1.25 billion by a contribution from the American Rescue Plan Act for a grand total of $16.25billion dollars.
Venues like museums, movie theaters, live theatre venues, and concert halls are eligible for the SVOG grant. In addition, it’s important to note that things related to live venues are also covered, so groups and people such as talent agents for theatre and many supporting services are also eligible for SVOG funding.
The grant is, quite simply, designed to help entertainment- and venue-related businesses that have been hurt by the shutdown.
Smaller venues shouldn’t worry about losing out on funding. For the first fifty-nine days of the SVOG opening, at least two billion dollars will be set aside for eligible entities with fifty or fewer employees.
The application portal rollout
The official rollout of SVOG funding started on April 26th, but the first technical rollout was on April 8th. If you didn’t know about the April 8th rollout or faced issues on that date (unlikely, given that the site was only live for a few hours before being shut down), don’t worry. The reasons behind the issues stemmed from faulty site design on the SBA’s side, forcing them to shut down the site for maintenance.
But don’t feel discouraged about applying if you experienced issues before. The portal is now working, and businesses are already applying now.
We have been keeping an eye on information regarding SVOG funding distribution, and the SBA has now stated that applicants will begin to receive funds by the end of May.
The SVOG application process hasn’t been given a set cut-off date as of yet. We expect that applications should be open until the $16.2 billion is spent but if you are interested in applying, we strongly recommend you do it as quickly as possible. The longer you wait it just means more of the funding will have already been passed out and by then you might have missed your opportunity.
Some venue operators may be confused about how SVOG funds will be allocated to them if they were also awarded PPP funding.
If you received first or second-round PPP funding after December 27, 2020, then that amount would be subtracted from your SVOG fund’s total. So, for example if you received $200,000 in second round PPP, and you would have gotten $400,000 from SVOG funding, then you would only actually receive $200,000 from your SVOG funding. It’s also important to note that you cannot apply for a PPP loan after you receive funding from the SVOG.
According to the SBA website, there is an allowable use of funds which means the grant can only be used for specific things. They include:
- Payroll costs
- Rent payments
- Utility payments
- Scheduled mortgage payments (not including prepayment of principal)
- Scheduled debt payments (not including prepayment of principal on any indebtedness incurred in the ordinary course of business prior to February 15, 2020)
- Worker protection expenditures
- Payments to independent contractors (not to exceed $100,000 in annual compensation for an individual employee of an independent contractor)
- Other ordinary and necessary business expenses, including maintenance costs
- Administrative costs (including fees and licensing)
- State and local taxes and fees
- Operating leases in effect as of February 15, 2020
- Insurance payments
- Advertising, production transportation, and capital expenditures related to producing a theatrical or live performing arts production.
Managing your SVOG funding, and keeping track of it, is very important. You must retain employment records for four years following the receipt of the SVOG grant, and retain all other records for three years.
Lets get the show on the road!
We have seen first-hand the impact the past year has had on some of our clients and we know how important this funding is. We know the grant might not be a game-changer by itself, but at least it might help bridge the gap until things really open up again.
Time is ticking for the opportunity to get your SVOG funding, and Borland Benefield wants to help. If there is anything we can do for you or your business, reach out to me, Clif Daniels at cbd@borlandcpa.com