Additional relief from COVID-19 disruption came at the end of 2020 that may be beneficial for not-for-profit organizations. While much of the attention has been on the updates to the Paycheck Protection Program in the Consolidated Appropriations Act, 2021 a second law brought changes that not-for-profit organizations may want to note as well.
The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act created additional funding opportunities that may be applicable to cultural institutions, museums, and other similar not-for-profit organizations. It established Shuttered Venue Operator (SVO) grants for organizations that were ineligible or did not take advantage of the COVID-19 relief under the Paycheck Protection Program (or the revised program for 2021 commonly known as the PPP2).
SVO Applicability with Other SBA Programs
Congress has allocated $15 billion to the Small Business Administration (SBA) to make grants to live venue operators, theatrical operators, and talent representatives through the SVO grants. Of this amount, $2 billion has been set aside for eligible organizations with fewer than 50 full-time employees. Although other SBA lending programs – notably the Economic Injury Disaster Loss (EIDL) loans – can be combined with the PPP, Shuttered Venue Grants cannot. Not-for-profits considering an SVO grant will need to choose between taking the SVO and pursuing PPP funding.
Conditions for Receiving a SVO Grant
Eligible applicants may qualify for SVO grants equal to 45% of their 2019 gross earned revenue up to $10 million. An eligible entity formed after Jan. 1, 2019 can receive the lesser of average monthly revenue for each full month in operation during 2019 multiplied by 6 or $10 million.
Entities eligible for SVO include:
- Live venue operators or promoters
- Theatrical producers
- Live performing arts organization operators
- Relevant museum operators, zoos and aquariums who meet specific criteria
- Motion picture theater operators, and
- Talent representatives
Each subsidiary business entity owned by an eligible entity that also meets the eligibility requirements may be eligible as well. Additionally, the organization will need to have been in operation as of Feb. 29, 2020. As mentioned before, the SVO grants are mutually exclusive with PPP loans.
Eligible Uses for SVO Grants
As with the PPP and EIDL loans, recipients of SVO grants will be required to use their grant proceeds for specific types of expenses related to maintaining their organization’s operations. These eligible costs 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 Feb.15, 2020
- Worker protection expenditures
- Payments to independent contractors (not to exceed $100K in annual compensation per 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 Feb. 15, 2020
- Insurance payments
- Advertising, production transportation, and capital expenditures related to producing a theatrical or live performing arts production (may not be primary use of funds)
SVO grant funds may not be used for the following:
- Purchases of real estate
- Payments on loans originated after Feb.15, 2020
- Investments or loans
- Contributions or other payments to, or on behalf of, political parties, political committees, or candidates for election
- Any other use prohibited by the Administrator
Timing of Relief
The SBA is continuing to set up the grant program as of the date of this publication and has yet to open the platform for accepting applications. It has indicated that once opened, applications will be processed based on priority.
Organizations receiving First Priority – access to the grants in the first 14 days of the SBA accepting SVO applications, will include anyone who suffered a 90% revenue loss or greater between April and December 2020 compared to the same period in 2019 due to the COVID-19 pandemic.
Second Priority is the next 14 days after First Priority and goes to organizations that suffered 70% revenue loss or greater from April through December 2020 compared to the same period in 2019. Any organization that experienced 25% revenue loss or greater will have access to SVO grants in the 28 days after the First and Second Priority periods have elapsed.
Organizations that fall into the First or Second Priority classifications may be able to receive supplemental funding for their most recent calendar quarter, starting April 1, 2021 or later, provided funding for these grants is still available.
For More Information
As with other COVID-19 loan and capital assistance programs, guidance on the SVO grants is evolving. Visit the SBA web page for the latest information or contact member of our COVID-19 loan and capital assistance team for more information.
Published on March 01, 2021