Alert

This article was updated April 27, 2021. Guidance on this topic is constantly evolving. Information is current as of the date of publication.

The Shuttered Venue Operators Grant (SVOG) program makes over $16 billion in grants available to venues impacted by the COVID-19 pandemic. The SVOG program’s application portal reopened on April 26 after technical issues shut it down on its original launch date in early April. 

Applicants can access the grant portal, set up by the Small Business Administration’s (SBA) Office of Disaster Assistance, on the SBA website. Before applying, venues should be registered in the federal government’s System for Award Management.

The SBA continues to issue new guidance, which includes an Applicant User Guide and a preliminary application checklist. A revised list of frequently asked questions and video tutorials are also available on the website.

Below, gain insight into key questions entities may have when applying for this program.

Overview of the Shuttered Venue Operators Grant Program

The grants were established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and are available to for-profit and not-for-profit entities, including relevant museums. However, to qualify as a relevant museum, an organization must only be a not-for-profit. The act was signed into law December 27, 2020.

Initial grants will be 45% of an entity’s gross earned revenue in 2019, capped at $10 million.

Who’s eligible for a Shuttered Venue Operators Grant?

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

Can venues receive a second-round PPP loan and a Shuttered Venue Operators Grant?

In a change from earlier guidance, venues planning to apply for a SVOG may now also apply for a second round of Paycheck Protection Program (PPP) loans.

Any money a venue receives from PPP round two will be deducted from the amount granted under SVOG. For example, if a venue is eligible for a $50,000 SVOG and has received $15,000 in a second-round PPP loan, the venue’s SVOG can’t exceed $35,000.

Also, if a PPP applicant is approved for SVOG funding before a loan number is issued for the PPP loan, the applicant isn’t eligible for a PPP loan.

What are required characteristics of venues eligible for a Shuttered Venue Operators Grant?

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

Do applicants need to meet additional requirements based on entity 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.

Who isn’t eligible for a Shuttered Venue Operators Grant?

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, one of 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.
• 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

What’s the priority for disbursing Shuttered Venue Operators Grants?

Of the available $16 billion, $2 billion has been set aside for eligible organizations with fewer than 50 full-time employees. Any portion of the set-aside amount that isn’t used after 60 days of the program’s implementation will become available to all eligible applicants.

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.

After that, grants will be awarded to all other eligible organizations.

Do Shuttered Venue Operators Grants need to be used within a certain timeframe?

Grants may be used for any expenses incurred between March 1, 2020, and December 31, 2021.

What are allowable expenses for Shuttered Venue Operators Grants?

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

Are venue operators required to have their financial statements audited before being able to submit a SVOG application?

According to the latest version of the application checklist, an audited financial statement should be submitted by entities that obtained this document within the normal course of business in 2019. Additionally, a Single Audit should be submitted by entities that expended $750,000 or more in Federal grant funds in 2019.

We’re Here to Help

To gain a deeper insight into the grant program, please visit the SBA website to review the most up-to-date information and FAQs or contact your Moss Adams professional.

Learn more about additional COVID-19-related relief opportunities for not-for-profit organizations in our article, Not-for-Profit Entities Could Benefit from Latest COVID-19 Stimulus Package.