Shuttered Venue Operators Grants

The Shuttered Venue Operators Grants, opening April 8 and administered by the SBA, will provide grants to event and performance venues closed during COVID-19.  There will be a national informational webinar on the application from 2:30 to 4 p.m. ET on Tuesday, March 30, 2021. Register here.

How many times are we going to find ourselves describing the plight of venues and performing artists during the pandemic? It still feels like it isn’t fully understood…

Performing-based venues and businesses were the first to close and will be the last to open.  They are 100% closed and for an indefinite period of time.  Even after some lifting of restrictions, there just isn’t a working economic model in place yet.  There is no real take-out option, no real digital option, no clear pivot to be made.  For one of the key cultural cornerstones of the modern American community, there is no functioning business model in place, leaving thousands of venues at risk of permanent closure in communities throughout the country.

That’s why the Shuttered Venue Operators Grant program is being put together.  Through this program, at least $15 billion in grants will be distributed to shuttered venues by the SBA’s Office of Disaster Assistance.  Eligible applicants may qualify for grants equal to 45% of their gross earned revenue up to $10 million.  And at least 13% of the funds will be dedicated to companies with less than 50 employees.

While the enthusiasm is high and the legislation passed several months ago, the program is still waiting until April to open.  More details keep emerging about about the eligibility, application steps and timeline.  Recently, the SBA launched a splash page, where you can register for updates, and the week before released a new set of documents with more information, including a preliminary checklist.

They’ve made it clear that this all may still change, so take it with a grain of salt.

One key note for any interested applicants is that the initial legislation included a limitation on applying across the other SBA programs, such as the PPP and EIDL.  Thankfully, that was changed with the most recent stimulus bill.

As a part of our series on relief funding and support, this article will look at the following for the SVO program:

• The Background
• Who is eligible?
• Amounts
• How to Apply
• Allowable Use of Funds
• Resources and Guides

The Background

Way back in 2020, the nationwide #SaveOurStages initiative celebrated a successful push for federal relief funding specifically for performance venues.  The unique initiative combined the advocacy power of both traditionally for- and non-profit performance venues to rally for the Save Our Stages Act (Senate Bill 4258).  The legislation was then included in the Heroes Act passed by the House on October 1, which then lumbered through the Senate to finally pass on December 21.

The bill includes provisions to establish a $15B grant program for live venue operators, promoters, producers and talent representatives.  It prescribes specific guidelines that restrict the size of the eligible recipient companies by employee number, number of locations, and ownership structure.  It limits grant size to a percentage of gross revenues, focuses on reimbursements for a set date range, and defines eligible expenses.

After an eventful beginning to 2021 in Washington DC, the first info was launched in mid-January by the SBA with the program now given a new name in the Shuttered Venue Operators Grant program.  Details weren’t much further along at that point, however.

In fact, details have remained slim until late February.  Just a few days after a pointed letter from a handful of Congresspeople urged progress on the program, the SBA finally released a new checklist, FAQ and other documents.  Now, with another $1.25B in the American Rescue Act, along with a few adjusted provisions, SVOG looks ready to open on Thursday, April 8.

Who is eligible?

The SVOG program is available to certain venues and other entities impacted by the COVID-19 pandemic, including any of the following:

• Live venue operators or promoters
• Theatrical producers or production companies
• Live performing arts organizations
• Relevant museums
• Movie theater operators
• Talent representatives

To be eligible for the SVOG program, these organizations must:

• Have been fully operational as of February 29, 2020
• Show a decline in gross earned revenue of at least 25% from a quarter in 2020 as compared to the same quarter in 2019
• Intend to reopen
• Not have applied for or received a Paycheck Protection Program (PPP) loan on or after December 27, 2020 (it appears that this limitation will be lifted upon passage of the American Rescue Plan Act, likely to pass this week)

There are further criteria for venue operators, promoters, and producers, as well as venues for artists and entertainers represented or managed by a talent representative grantee.

To qualify under the guidance, these organizations must have all of the following characteristics:

• A defined performance and audience space
• Mixing equipment, a public address system, and a lighting rig
• One or more people who carry out at least two of the following roles: sound engineer, booker, promoter, stage manager, security personnel, and box office manager
• A ticket or cover charge to attend most performances
• Equitably compensated artists
• Performances marketed through print or electronic publications, websites, mass email, or social media

For the full set of eligibility requirements, please refer to the SBA’s recently published list.

Additional Eligibility Guidelines (by venue type)

Applicants may need to meet additional requirements depending on entity type.

Venues That Produce Free Events

If a venue is owned and operated by a not-for-profit organization that produces free events, the events must be primarily produced and managed by paid employees, not volunteers.

Live Operators

A live venue operator or promoter, theatrical producer, or live performing arts organization operator is an individual or entity whose principal business activity is to organize, promote, produce, manage, or host events by performing artists. A charge is paid for these events, and performers are paid by formal agreement.

A live operator must also meet one of the following criteria:

1. Generate at least 70% of earned revenue for events through cover charges or ticket sales; production fees or reimbursements; not-for-profit educational initiatives; or sale of event beverages, food, or merchandise
2. Make tickets available for public purchase at least 60 days before the date of the event

Motion Picture Theater Operators

A motion picture theater operator is a person or entity that, as its principal business activity, owns or operates at least one movie theater. The theater must have all of the following characteristics:

1. At least one auditorium that includes a motion picture screen and fixed audience seating
2. A projection booth or space containing at least one motion picture projector
3. A ticket charge to attend screenings
4. Screenings marketed through print or electronic publications, websites, mass mail, or social media

Relevant Museums

According to the act, a relevant museum has the meaning given to the term museum in Section 273 of the Museum and Library Services Act. This law defines a museum as an entity that is organized for educational, cultural heritage, or aesthetic purposes; has a professional staff; owns or uses tangible objects; cares for those objects; and regularly exhibits those objects to the public.

Besides traditional museums, the definition includes aquariums, arboretums, botanical gardens, historic houses and sites, nature centers, planetariums, and zoos.

A relevant museum must meet the following characteristics:

1. Its principal business activity must be as a museum
2. It has indoor exhibition spaces that are a component of the principal business activity and that have been subject to COVID-19-related occupancy restrictions
3. It has at least one auditorium, theater, or performance or lecture hall with fixed audience seating and regular programming

Talent Representative

To be eligible as a talent representative, at least 70% of operations must be representing or managing artists and entertainers, including booking artists primarily at live events and representing performers who are paid based on ticket sales or a similar basis.

Disqualifications

A person or entity isn’t eligible for the SVOG program if it meets, or is controlled or majority owned by an entity that meets, the following criteria:

• US contribution. It doesn’t have a place of business located in the United States; doesn’t operate primarily within the United States; or doesn’t make a significant contribution to the US economy through paying taxes or using US products, materials, or labor.
• Creation and operation. It wasn’t in operation as of February 29, 2020.
• PPP loans. It applied for or received a PPP loan on or after December 27, 2020. (This limitation likely to be lifted with the passage of the American Rescue Plan Act, under consideration by the House this week.)
• Publicly traded corporations. It’s a publicly traded corporation or is majority owned and controlled by a publicly traded corporation.
• Inappropriate content. It presents live performances or sells products or services deemed prurient or inappropriate.
• Federal funding. It received more than 10% of gross revenue from federal funding in 2019, excluding amounts received under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

An entity also isn’t eligible if it has more than two of the following characteristics:

• Owns venues or operates in more than one country
• Owns venues or operates in more than 10 states
• Employs more than 500 employees as of February 29, 2020

Amounts

Grant amount will be either:

• 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 you were in operation during 2019 multiplied by six (6) OR $10 million, whichever is less.

How to apply

Applications open Thursday, April 8.  Prior to the official SVOG application opening, the SBA will host a national informational webinar to highlight the application process for potential eligible entities from 2:30 to 4 p.m. ET on Tuesday, March 30, 2021. Those interested in participating can register here.

SBA is in the process of setting up the grant program and is not yet accepting applications. Those who have suffered the greatest economic loss will be the first applications processed under the following schedule:

• In the first 14 days of implementation of the program, grants will only be awarded to organizations that had revenue loss of 90% or more from April 1 to December 31, 2020, as compared to the same period in 2019.
• In the next 14 days of the program, the program will be open to entities that experienced revenue loss of 70% or more from April 1 to December 31, 2020, as compared to the same period in 2019.
• Beginning after 28 days of grant awards, entities that suffered a 25% or greater loss of earned revenues between one quarter of 2019 and the same quarter in 2020 may apply.
• After that, grants will be awarded to all other eligible organizations.
• Supplemental funding will be made available to all recipients who suffered a 70% or greater revenue loss for the most recent calendar quarter, if there are remaining funds.

Application Materials – All Applicants

Although the program is not yet open, the SBA has published a preliminary checklist of application materials that will likely be required for application, which includes the following.  While it is encouraged to begin preparing, please do not be worried if you do not have some or even many of the items listed here.  The SBA is still developing the guidelines and applications for this process and does not intend for this list to be definitive.  It also may not be comprehensive.

Background documents

• Written statement of need and assurance
• Corporate documents (may include Articles of Incorporation, Certificate of Existence, Certificate of Organization, State LLC Agreement, Certificate of Formation or Articles of Information)
• Government issued photo ID – front and back
• Employee list with job titles and employee status (full or part time)
• Tax Exempt Status Letter (only required for non-profit entities)

Financial documents

• 2019 Tax Return
• 2020 Tax Return, if filed
• Quarterly Income Statements for 2019 and 2020
• Copy of most recent Audited Financial Statement (2019) or Single Audit (if applicable) or link to website where the report can be located
• Indirect Cost Rate Agreement from Cognizant Agency (if applicable)
• Payroll statements covering 2/29/2020

Standard Forms

• SF-424B – Assurances for Non-Construction Programs (via grants.gov)
• SBA Form 480 – Size Status Declaration
• Certification of a Drug-free Workplace
• SBA Form 1623, Certification Regarding Debarment, Suspension, and Other Responsibility Matters
• SBA Form 1711, Certification Regarding Lobbying & Disclosure of Lobbying

Application Materials – Specific to Venue Type

Live Venue Operator or Promoter, Theatrical Producer, or Live Performing Arts Organization Operator

• Floor Plan (and plan of grounds if outdoor space is used for the performance venue)
• Documents to show that the venue has audio mixing equipment, a public address system, and a lighting rig
• Marketing materials listing event title, show time, and price or entry requirements (may include printed materials or social media posts)
• Box office/ticketing report that shows date, artist, ticket price, and number of tickets sold. Provide the report for all February 2020 performances. If the venue was in operation but had no performances in February 2020, select one month between January 2019 and January 2020 and provide that report.

Motion Picture Theatre Operator

• Floor Plan (the floor plan must identify the projection booth)
• Marketing materials listing motion picture titles and show times (may include printed materials or social media posts)
• Box office/ticketing report that shows date, ticket price, and number of tickets sold. Provide the report for all February 2020 performances. If the theater was in operation but had no performances in February 2020, select one month between January 2019 and January 2020 and provide that report.

Museum

• Floor Plan (and plan of grounds if outdoor space is used for the performance venue)
• State or local COVID occupancy restrictions demonstrating limits on occupancy Talent Representative
• Examples of Contractual/Consultant Agreements with talent represented, and venues used and evidence of booking
• List of all individuals or acts represented and venues for which they were contracted to perform in 2019 and 2020 (including performances cancelled due to COVID-19)

Full description of all documents above are available in the SBA checklist.

Use of funds

The following are among allowable expenses for the SVOG program:

• Payroll
• Rent and utilities
• Scheduled mortgage payments—excluding prepayment of principal
• Scheduled debt payments on any indebtedness incurred before February 15, 2020—excluding prepayment of principal
• Worker protection expenses
• Payments to independent contractors—not to exceed $100,000 in annual compensation per contractor
• Operating leases in effect as of February 15, 2020
• Insurance payments
• Other ordinary and necessary business expenses, such as maintenance expenses, administrative costs, and state and local taxes

Grants may also be used—but not primarily—for advertising, production, transportation, and capital expenditures related to producing a live performances or exhibitions.

The following expenses may not be paid by the SVOG program:

• Real estate purchases
• Payment of interest or principal on loans originated after February 15, 2020
• Investments or lending
• Political expenses

Resources