On December 27, 2020, funding for the Shuttered Venue Operators Grant (SVOG) program (Program) was signed into law with the Consolidated Appropriations Act of 2021 (CAA). The U.S. Small Business Administration (SBA) continues to update answers to frequently asked questions regarding the Program. On February 28, 2021 and March 5, 2021, the SBA updated the frequently asked questions, which can be found here. Below are highlights of certain parts of the updated FAQs to assist potential applicants in considering the Program and preparing to file, if eligible.
Please note, currently the SBA has yet to open the Program to take applications/submissions. The FAQs have been issued in anticipation of opening of the SBA portal to accept applications. The most important thing for interested applicants to do right now is register for a Dun and Bradstreet (DUNS) number and then a profile on sam.gov, which is a prerequisite for receipt of any Federal contract or grant, such an SVOG.
Business Operational in 2020, But Not in 2019. Is the Entity Eligible for the Program?
If an entity was conducting business (including by incurring start-up costs and preparatory activities) on February 29, 2020, the entity will be eligible, so long as the entity can show the threshold earned revenue loss. Please note that for entities not open in 2019, the SBA will use an alternative method for calculating revenue loss that is based on the approach used in connection with the Paycheck Protection Program (PPP). Entities that were not in operation in 2019 may still qualify for the Program, if the gross earned revenues for the 2nd, 3rd, or 4th quarter in 2020 shows that the entity experienced a reduction of no less than 25% of gross earned revenues from its 1st quarter in 2020. This method may be helpful for entities that had merchandise sales or advance ticket sales but were not able to open due to the pandemic.
The Program and PPP Loans. Can an Entity Receive Both?
NO. In the event an entity applied for either a First Draw or Second Draw PPP loan on or after December 27, 2020, the entity would be prohibited from applying for a Program grant until the PPP loan is declined.
In the event that an entity is declined for a PPP loan, the participating PPP lender will notify the entity and then the entity will be eligible for SVOG. Entities must make an informed business decision as to which program will most benefit them and apply accordingly. If an entity applies for AND is approved for a PPP loan, the entity CANNOT then cancel the PPP loan or decline to accept an approved PPP loan to become eligible to apply for an SVOG.
Private University - More than 10% of its 2019 Gross Revenue is Federal Funding
An entity will be precluded from the Program if more than 10% of its 2019 gross revenue was received from the federal government. That does not include disaster assistance. For a private university that either (i) “has a separate legal existence but is majority owned and controlled by the university” or (ii) “lack[s] separate legal existence from its parent university”, the private university will need to reference the parent university’s gross revenue in determining whether it will be ineligible for the Program if more than 10% of the parent’s university’s 2019 gross revenue came from federal funding. The 10% cap on federal funding does not apply to public universities owned by local or state governments.
Eligible Entities Owned by State or Local Government, Including Public Colleges and Universities
For entities that are state-owned, the Economic Aid Act has established an alternate eligibility restriction. Specifically, state-owned entities cannot contain any other state-owned entities apart from the live venue operator or promoter, live performing arts organization operator, museum operator, movie theatre operator, or talent representative. The SVOG rule restricting entities that receive more than 10% of their gross revenue from the Federal government does not apply to state-owned entities.
Exclusion of Disaster Assistance Funds
Disaster funds received from the federal government or the state government will not be included in an entity’s gross revenues calculation.
Mobile, Portable, and Touring Facility are SVOG-Qualifying Venues
Venues that meet the space-related requirements (e.g. defined performance and audience spaces, lighting rig, etc.), that are set forth in the Economic Aid Act, are eligible to apply for the Program. These venues include traveling tents (i.e., festivals and circuses).
Museum or Movie Theatre Operators
If a museum or movie theater (that has a multipurpose room) has movable seating, it will not be eligible for the Program. Drive-in movie theatres are not eligible for the Program either. Under the Economic Aid Act, fixed seating is permanently fixed seating on the floor. Heavy or cumbersome seating (i.e., bleachers) also falls under the definition of fixed seating. The fixed seating requirement only applies to museum and motion picture theatre operators. Fixed seating is not a requirement for other eligible entities for the Program. Further, a museum is defined as “a public, tribal, or private nonprofit agency or institution organized on a permanent basis, for essentially educational, cultural heritage or aesthetic purposes that uses a professional staff, owns or uses tangible objects, cares for the tangible objects, and exhibits the tangible objects to the public on a regular basis.”
Does an Air Show Operator Fall Under the Live Venue Operator or Promoter Definition?
An air show operator is not deemed a live venue operator or promotor since the Economic Aid Act requires an entity to put on performing arts events at venues that qualify or sell tickets to the performing arts events that will be at held at the qualifying venues. Thus, an air show operator will not be eligible to apply.
In order for an eligible entity that operates seasonally to demonstrate the requirement, for a supplemental grant, that it experienced a 70% earned revenue loss, the entity can compare its Q2 2021 earned revenues to its Q2 2019 earned revenues.
If A company has 10 Subsidiaries or Affiliates that are Independent Legal Entities, Can All Such Independent Entities Apply for the Program?
A company can only have up to 5 affiliated eligible entities that have an active application that is pending before the SBA at one time. This is done in order to properly allocate the resources and reduce erroneous awards. However, if the SBA evaluates and declines an affiliated eligible entity’s application, another affiliated entity may submit an application for the SBA to evaluate. Applications that are submitted above the five-affiliated entity threshold will be reacted by the SBA.
Time-Frame for SVOG Recipients to Use the Grant Funds
For those recipients who receive the grant funds in the initial phase, those recipients will have one (1) year from the date that the awards are disbursed to them to use the funds. However, if the recipient receives a Supplemental Phase SVOG, they will have eighteen (18) months from the date of the initial phase awards disbursed to use the grant funds. All unexpended SVOG funds must be returned by the grantees at the end of the application deadline.
Next Steps: What Entities Can Do to Get Ready for the Program to open?
Entities considering applying for a Program grant can:
- Seek legal counsel if you are unsure if you are eligible to apply for a Program grant.
- Register for a Dun and Bradstreet number (DUNS), which is a prerequisite to file an application with the SBA’s application platform, the System for Award Management (SAM.gov). Entities will not be able to use their TIN, EIN or other identification number to register with SAM.gov. The FAQs state that when able to apply through SAM.gov, registration may take up to two weeks once submitted.
 The Program is Section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act).