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Live Venues Face Difficult Choice of Waiting for Grant Funds or Applying for PPP

  • Economic Aid Act includes $15 billion for grants to arts and cultural organizations, but the program is currently not open to applicants
  • Some venues have opted to pursue a loan through the Paycheck Protection Program to get more immediate aid
  • Under the Shuttered Venue Operators Grant program, venues cannot receive funds if they are approved for a PPP loan

Live venues scored a major victory in the $900 billion Economic Aid Act approved in December, as the legislation approved a $15 billion grant program for qualified arts and cultural organizations that suffered significant losses during the COVID-19 pandemic. Proposals have been floated to provide more direct support to other hard-hit industries, such as restaurants and gyms, but so far the Shuttered Venue Operators Grant program is the only industry-specific relief measure passed by Congress.

Nearly two months after the measure was signed into law, however, the grant program is not yet taking applications. The latest action by the U.S. Small Business Administration has been to update the FAQs on the program on Feb. 12.

Live venues have been among the businesses with the greatest economic losses during COVID-19. They were typically closed early in the pandemic due to restrictions on crowd sizes, with limited options for raising revenues after losing ticket sales. Even as restrictions were eased, audiences have been more reticent to attend shows due to fears of contracting the virus, and venues have frequently found it unprofitable to host shows with reduced capacities.

The grant program, which offers 45 percent of an applicant’s 2019 revenues up to $10 million, was the result of a lobbying effort by the National Independent Venue Association, which argued that Paycheck Protection Program loans were not suitable for the live event industry. The loans can be forgiven if at least 60 percent of the funds go toward maintaining payroll, but live venues typically have lower staffing needs and spend more money on overhead. Despite this disadvantage, the delay in the Shuttered Venue Operators Program has some struggling venues applying for PPP loans to receive more immediate relief.

The SBA is reportedly hammering out the eligibility requirements of the grant program to ensure that funding only goes to qualifying businesses, which includes businesses such as movie theaters, performing arts organizations, live venues, and qualifying museums, zoos, and aquariums. The language in the Economic Aid Act establishes several restrictions aimed at narrowing the pool of eligible recipients to businesses with arts and cultural activities as their primary purpose, thereby excluding potential recipients such as bars or restaurants with live music performances.

Even with these limitations, it is estimated that at least 30,000 entities will qualify for the program. There is also likely to be significant competition for existing funds, as the SBA has outlined two periods that give priority to certain applicants for nearly a month. The first 14-day priority period would be targeted at applicants that suffered at a revenue loss of at least 90 percent between April and December 2020, with the next 14-day period open to venues that lost at least 70 percent of their revenues in the same period.

Following these priority periods, the program will be open to venues with an annual revenue loss of at least 25 percent when comparing any quarter in 2020 to the corresponding quarter in 2019. If any funding remains, supplemental grants will be available to applicants that have posted a revenue loss of at least 70 percent for the most recent calendar quarter as of April 1, 2021 or later.

While the grant program is open to venues that previously received PPP loans, a business cannot receive a grant if it has applied for a PPP loan under the latest round of funding or received money this way. While entities can’t apply for both a grant and PPP at the same time, they are allowed to submit an application for the other option if one rejects them.

NIVA had anticipated a lengthy period between approval of the grant program and its implementation, and has said the process is necessary “to ensure the emergency relief is dispersed as Congress intended” and “implemented accurately, fairly and as expediently as possible.” The organization is also working to assist venues deemed to be at the greatest risk of closing in the interim by collecting donations through its Emergency Relief Fund.

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