The U.S. Small Business Administration (SBA) has announced that it will be opening the Shuttered Venue Operators Grant (SVOG) application portal on Thursday, April 8, 2021. The Shuttered Venue Operators Grant (SVOG) program provides economic relief for eligible venues affected by the COVID-19 pandemic. SVOG was established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, and was later amended by the American Rescue Plan Act which was signed into law in March 2021.
This program includes over $16 billion in grants available to shuttered venues to be administered by the Small Business Administration (SBA) Office of Disaster Assistance.
Who qualifies for the SVOG program?
Entities eligible to receive a SVOG include:
- Live venue operators or promoters
- Theatrical producers
- Live performing arts organization operators
- Relevant museum operators, zoos and aquariums meeting specific criteria
- Movie theater operators
- Talent representatives
- Each business entity owned by an eligible entity that also meets the eligibility requirements
All eligible entities must have been in operation as of February 29, 2020. The previous law prohibited applicants receiving both PPP and SVOG, however, H.R. 1319 amended that provision. Under the new guidelines, the SVOG provided to a venue or promotor that received a PPP loan (whether First Draw or Second Draw) on or after December 27, 2020 will be reduced by the PPP loan amount.
SVOG is limited to venues that host performing arts events. Wedding venues, state/county fairs or sporting events do not qualify, as their primary line of business is not “performing arts.”
What is the SVOG grant amount?
What is the SVOG grant amount?
Grant amounts reflect either of the following instances:
- For an eligible entity in operation on January 1, 2019, grants will be for an amount equal to 45% of their 2019 gross earned revenue OR $10 million, whichever is less.
- For an eligible entity that began operation after January 1, 2019, grants will be for the average monthly gross earned revenue for each full month the business was in operation during 2019 multiplied by six OR $10 million, whichever is less.
- For an entity that was not in operations in 2019, but were in operation as of February 29, 2020, the SBA will use an alternative method by allowing them to qualify for the grant if they can demonstrate a reduction of gross earned revenue of 25% or more for second, third, or fourth quarters of 2020 compared to first quarter of 2020. Once it is determined that they qualify, the calculation for the amount of grant they can receive is calculated the same in 2 above.
When does the SVOG Program open?
The SBA is currently building the grant program and is expected to begin accepting applications in April 2021. Entities that have experienced the greatest economic loss will be the first applications processed.
During the first 59 days of opening the SVOG program, the SBA will reserve no less than $2 billion for grants to entities that have no more than 50 employees.
First Priority – First 14 days of grant awards
- Entities that suffered a 90% or greater revenue loss between April 2020 through December 2020.
Second Priority – Next 15 days of grant awards
- Entities that suffered a 70% or greater revenue loss between April 2020 through December 2020.
Third Priority – Beginning 28 days after first and second priority awards
- Entities that suffered a 25% or greater earned revenue loss between one quarter of 2019 and the corresponding quarter of 2020.
Supplemental funding will be available after all priority periods listed above have passed. Supplemental funding will be available to recipients of first, second and third priority-round awards that suffered a 70% or greater revenue loss for the most recent calendar quarter (as of April 1, 2021 or later).
How can SVOG funds be used?
Funds can be used for the specific expenses listed below:
- 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 per contractor)
- Other ordinary and necessary business expenses, including maintenance costs
- Administrative costs (which include 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 live performing arts production. This may not be the primary use of funds.
The funds cannot be used to:
- Buy real estate
- Make payments on loans originated after February 15, 2020
- Make investments or loans
- Make contributions or other payments to, or on behalf of, political parties, committees or candidates for election
- Any other use prohibited by the grant administrator
Grantees will be required to keep record of the use of funds, demonstrating their compliance with eligibility of the SVOG program. Those who receive funds from the SVOG program are required to retain employment records for four years after receiving this grant and retain all other records for three years.
How can I apply for the SVOG program?
Applicants should prepare now to submit an application. Alabama’s Small Business Development Center has created a list of steps to take when preparing your application. We recommend you use these steps as a guide to best prepare for this upcoming application process. Note that several of these steps may be done ahead of time and can take a week or more to complete.
Connect with Cassandra Sanders, CPA, MBA and QuickBooks® Pro Advisor to help guide and support this application process. We can help determine if this program is a good fit for your business needs and goals, and we are eager to help support you when adapting to today’s rapidly changing tax environment.