Shuttered Venue Operator Grants – Important Considerations

The Shuttered Venue Operator Grant (SVOG) program was established as part of the Economic Aid Act signed into law on December 27^th, 2020.  The program was allocated $15 billion in funds for grants to shuttered venues.  This program, like the PPP and EIDL programs, is being administered by the SBA.  Eligible applicants may qualify for funding equal to 45% of their gross earned revenue up to a maximum of $10 million per applicant.  $2 billion of the $15 billion allocated is reserved specifically for eligible applicants with up to 50 full-time employees.  This funding is considered a grant and will not have any repayment requirements, unless it is determined that the organization was not eligible to receive the grant or used the funds for ineligible purposes. 

The SVOG program is not yet accepting applications.  The SBA has produced a set of FAQs, revised as recently as February 28^th, to address eligibility and usage questions.  Not all questions have firm answers as the program continues to evolve; however, there are several very important considerations that potential applicants can be thinking about and doing right now.

• If you have been approved for or already received a PPP First or Second Draw loan after December 27^th, 2020, you are automatically ineligible for an SVOG.  You will only be eligible for SVOG funds if you have not applied for a PPP loan after December 27^th or if your PPP loan application was denied.  You cannot apply for a PPP loan and decline the loan based on being eligible for more funding under the SVOG.  If you received a PPP loan between March 27^th and August 8^th of 2020, you are eligible to receive SVOG funds.
• Eligible entities are live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theater operators, and talent representatives.  Additional entities may be eligible. 
• The business must have been in operations as of February 29, 2020 to be eligible.
• If the organization received more than 10% of their 2019 gross revenue from Federal funding, they are not eligible for SVOG. 
• Organizations that received state or local government relief are eligible for SVOG, however, if state or local government funding are being used to cover specific costs, the SVOG funds may not be used to cover those same costs.  No ‘double dipping.’
• Wedding event venues, sports venues, and restaurants that feature live music are not likely eligible.  Dinner theatres may be eligible if the principal business activity is promotion, management, or hosting of live concerts, comedy shows, theatrical productions, or other events by performing artists, rather than restaurant operations, and all other eligibility criteria is met.
• Applicants must be registered in the System for Award Management (SAM.gov) and receive a Dun and Bradstreet (DUNS) number before applying for SVOG.  This can be done at any time prior to the SVOG applications going live.  We recommend doing this immediately if you believe your organization is eligible for SVOG funding.  Registering for a DUNS number through the SAM.gov registry may take up to two weeks once submitted.  Each entity that intends to apply for SVOG funds must have their own DUNS number.
• SVOG can be used for ordinary and necessary expenses.  This is defined as an expense that is common and accepted in your trade or business and is helpful and appropriate for your trade or business.
• SVOG funds are a Federal grant program, and, as such, will count toward an entity’s requirement to comply with the Single Audit Act if it receives $750,000 or more in Federal grant funding during a single fiscal year.  SVOG funds cannot be used to pay for the additional audit expense associated with having a Single Audit completed.
• SVOG recipients that receive funds in the initial phase will have on year from the date the award is disbursed by the SBA to use the grant funds.  If a supplemental phase SVOG is awarded, the recipient will have 18 months from the date of the initial phase disbursement to use their combined grant funds.  Any unexpended funds must be returned once the one year or 18-month period has expired.
• The grants will be issued based on priority.  Entities that suffered a 90% or greater revenue loss between April and December 2020 due to the pandemic will be eligible for the first two weeks, followed by entities that suffered a 70% or great revenue loss.  Third priority includes entities that suffered a 25% or great revenue loss between one quarter of 2019 and that same quarter in 2020.  Supplemental funding may be available for recipients that suffered a 70% or greater revenue loss for the most recent calendar quarter.
• Donations and contributions are not included in gross earned revenue, along with disaster assistance from federal, state, and local governments.  Rental income from tenants and income from renting the venue for private events is counted towards earned revenue.
• A maximum of five affiliated organizations may apply for SVOG funds.  Affiliation occurs when one organization has the power to control another organization, or a single person or entity has the power to control both.  Common ownership, management or contractual and legal arrangements typically cause affiliation.

We recommend keeping a close eye on our e-mail communication and signing up for the SBA’s email communication about this program to ensure that you are getting the most up-to-date information as it has made available.

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