Small Business Administration Set to Launch Shuttered Venue Operators Grant Program
The U.S. Small Business Administration (SBA) is preparing to administer the Shuttered Venue Operators (SVO) Grant program. The program, which was created by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, is funded in the total amount of $15 billion. The SBA’s information page with SVO Grant program details is available here.
Entities eligible to apply include live venue operators or promoters, movie theater operators, and talent representatives. To be eligible, the entity must have been in operation as of February 29, 2020, and must not have received a Paycheck Protection Program (PPP) loan on or after December 27, 2020. As a result, an entity cannot receive both a second draw PPP loan and a SVO Grant.
Eligible recipients can apply for grants in an amount up to 45% of their 2019 gross earned revenue or $10 million, whichever is less. The SVO Grant program employs a priority scheme by which recipients more significantly impacted by COVID-19 receive grants ahead of entities less significantly impacted.
The use of grant funds is limited to operating expenses, such as payroll costs, rent payments, utility payments and scheduled debt payments on any indebtedness incurred in the ordinary course of business prior to February 15, 2020. The funds may also be used for advertising, production transportation and capital expenditures relating to producing a theatrical or live performing arts production, so long as that is not the primary use of the funds. SVO Grant funds may not be used to buy real estate, make investments or loans, make political contributions, or make payments on loans originated after February 15, 2020, among other things.
The SVO Grant program is not yet open for application and more program details are scheduled to be released by the SBA in the coming weeks. Businesses who could qualify for a SVO Grant should carefully consider whether to forego applying for a second draw PPP loan in hopes of obtaining a SVO Grant. The period in which to apply for a second draw PPP loan is January 13, 2021, through March 31, 2021, subject to how quickly borrowers exhaust the total allotted funds. Businesses that wait for the SVO Grant program to begin accepting applications face uncertainty concerning whether their request will be honored at all and, if so, whether they will know if they are approved for a grant before the second draw PPP window closes.
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