UPDATE 3/9/21: See this informative blog post written by a colleague of mine for recent updates to the program, application process, required documentation, etc. An important reminder that applicants are required to register for a DUNS number on the SAM.gov website prior to applying — and it takes up to two weeks to process.
UPDATE 1/12/21: SBA is offering a free webinar overview of this program on Thursday, January 24, 2021 at 2 pm Central.
It’s big news that Consolidated Appropriations Act of 2021 (CAA) — the newest financial relief legislation — included a provision of grants for shuttered venue operators, originally known as the Save Our Stages Act. They set aside $15 billion to help these organizations, regardless of entity type.
I’ve recently received some questions that make it clear that folks don’t really understand how this program is distinct from others, and I wanted to clear up some confusion:
1) The reason live venues cannot receive PPP2 funds is that the Shuttered Live Venue Grant program is its substitute, built specifically for these types of organizations and industry.
2) It will be phased in over the course of a month — two weeks for the hardest hit, then two more weeks for the next-hardest hit, then it opens up to any other qualifying businesses. (This is generally not the case for other grants or credits, like PPP or ERC. Each has its own rules.)
To clarify, the grant program is not yet live and we do not yet know at what point the funds will be available.
But as is the case with all the other financial relief I’ve been covering, what’s important is to get as ready as you can be NOW, so that the moment guidance is released, forms come out, and the program goes live, you’re on it.
I’m going to start by encouraging you to read two articles — one is from Withum, a trusted accounting firm with a team that specializes in this industry. It’s to-the-point, instructional, and a solid reference.
The other is no surprise: my favorite tax writer, Tony Nitti, breaks it down and explains the details like few others can, with analysis and humor. If you actually intend on applying for one of these, skip the rest of my post and just switch to his most recent Forbes article. My post is simply a summary of his article, for those who aren’t sure if they might be interested and just want to learn about the basics.
And with that… there are three types of requirements: qualifying category; business requirements; and venue requirements. His article lists them in detail, but as a summary:
I. Qualifying Category Requirements
Category 1: Live venue operators or promoters, theatrical producers, or live performing arts organization operators
a) Organize/Promote/Produce/Manage/Host Life Performances
b) Ticket Brokers
Category 2: Relevant Museum
Category 3: Motion Picture Theater Operator
Category 4: Talent Representative
II. Business Requirements
1. It must have been fully operational on February 29, 2020;
2. Had a 75% of gross revenue during any quarter of 2020 over the same quarter in 2019;
3. Intends or has resumed operations (requirements differ based on which category);
4. Cannot be publicly traded or have received more than 10% of its revenue during 2019 from federal funding;
5. Cannot have MORE THAN TWO of the following characteristics:
– Locations in more than one country,
– Locations in more than 10 states, or
– More than 500 employees as of February 29, 2020.
6. No strip clubs;
7. Cannot receive a Paycheck Protection Program loan — either round 1 or the new second round — after December 27, 2020.
III. Venue Requirements
Depending on the category, there are specific requirements that the venues have certain characteristics, such as a defined performance and audience space, as well as paid ticket or cover charges. Again, see the article for a detailed list by category.
Once a business meets ALL the relevant requirements above, it is eligible to receive a grant.
Grant Amount Calculation
The initial grant will generally be equal to the lesser of three amounts:
1. 45% of the gross earned revenue of the business during 2019;
2. If the business started after January 1, 2019, the amount equal to the product of 6 multiplied by the average monthly gross earned revenue for each full month the business was in operation in 2019; or,
3. $10 million.
The grants will be prioritized: for the first 14 days they are available, grants will be awarded to those with a 90% drop in revenue compared to the same period in 2019. The next 14 days will prioritize those businesses who lost at least 70% of revenue when comparing the two periods.
Each qualifying business — even if affiliated with other businesses –- is eligible for its own grant. However, no more than 5 business entities of any “affiliated group” can receive a grant. For museums, the maximum grant for any one museum operator is $10 million, regardless of the number of museums operated.
A supplemental grant is also available if the revenues for the first quarter of 2021 are at least 70% less than the revenues for the same quarter in 2019. It will be 50% of the initial grant, but between initial and supplemental grants, the total amount received cannot exceed $10 million.
The grant dollars must be used for costs incurred from March 1, 2020 through December 31, 2021 (or as late as June 30, 2022 for supplemental grants). If not expended by the relevant deadline, the funds must be returned within 1 year after the date of disbursement of the grant.
The grants must be used on eligible expenses, including: payroll costs, mortgage interest, rent, utilities, worker protection expenses, independent contractors (up to $100,000 in annual compensation each), maintenance, administrative costs, state and local taxes, operating leases, insurance premiums, advertising, production transportation, and certain capital expenditures.
Receipt of the grant is not taxable — the grant represents tax-exempt income; and 2) any expenses paid with the grant money is fully deductible.
Again, thank you Tony — and best of luck to any of you out there who qualify; we can’t wait until the pandemic is over and we’re back in your halls again.
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