Owners and operators of qualifying independent venues and cultural institutions are anxiously awaiting the release of the application for the Shuttered Venue Operator Grants (“SVOG”) approved as part of the “Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act,” which was signed into law on December 27, 2020. The SVOG program includes $15 billion in grants to shuttered venues, such as live venue operators or promoters, theatrical producers, live performing arts organization operations, museum operators, motion picture theatre operators, and talent representatives.
The U.S. Small Business Administration (SBA), which will be administering the SVOG, has not opened applications yet, but regularly posts updated FAQs on their website. The latest FAQs (as of February 12) are available here. You can also watch a recorded webinar from January 14 about the SVOG. There are some steps that eligible organizations can take while waiting for the official application process to begin.
How does the PPP Loan Affect Eligibility?
Businesses that applied and were approved for a Payroll Protection Program (“PPP”) Loan prior to December 27, 2020 are eligible to apply for an SVOG. However, if a business applied for a first- or second-draw loan after that date, they are not eligible for an SVOG, unless the PPP Loan is declined. While venues are forbidden from applying for a new PPP Loan and the SVOG program at the same time, original PPP Loans made over the summer do not count as disqualifying. Unfortunately, venues cannot apply for a PPP Loan first, and then decide later to move forward with that loan if it does not receive a grant.
Those waiting for the SVOG funding queue very likely made the difficult decision to forego the PPP Loan with hope of accessing greater funding to support more diverse expenses available through the SVOG program. These organizations were faced with a difficult decision – give up nearly certain funding for payroll, rent, and utilities available now on a gamble for funding that can be used for a wider variety of purposes, including debt payments and some capital expenses, at some point in the future. There has been a wealth of information shared comparing and contrasting the two funding options and, as more information on the differences in authorized expenses and eligibility has become more widely available, businesses in this very vulnerable economic sector have become better positioned to make those choices. It remains frustrating, however, as the SVOG application is not yet available and the deadline to apply for a “second draw” PPP Loan is March 31, 2021.
How Are SVO Grant Amounts Determined?
SVO grants are sized by the average monthly gross revenue for each full month a company was operating in 2019, multiplied by six and capped at $10 million. Only monies organizations receive from the sale of goods or services are counted as earned revenue. Unearned revenue, including donations and other gratuitous contributions, such as foundation grants, corporate sponsorships, and individual gifts, are not included. Rental income from longer-term tenants and from short-term rentals for event hosting can be included in earned revenues, however, because they derive from standard commercial transactions for the paid use of facilities.
Funds can be used for a wide variety of expenses, including payroll, rent, utility payments, scheduled mortgage and debt payments, personal protective equipment, independent contractor payments, administrative costs, state and local taxes and fees and even insurance and capital expenditures.
Who Qualifies as an Independent Venue?
According to the SBA, “eligible entities may be live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, and talent representatives.” However, there are various requirements around which venues can apply for the grant funding. For example, a museum or movie theater must have fixed seating in place — that means a multipurpose room in which seats are brought in for a single event do not qualify. This “fixed seating” requirement only pertains to museums and movie theaters. Drive-in movie theaters and sports stadiums are not eligible, and wedding venues are not likely to be eligible either, as well as restaurants that also offer live entertainment and adult venues, such as strip clubs. Venues are required to have defined performance and audience spaces. If a particular venue, such as a circus, fair or entertainment business that provides talent at weddings/parties, cannot meet this requirement, it is not eligible to apply for an SVOG. Reference the latest SVOG FAQs for more information on eligibility.
What Businesses Can Do Now?
While these venues (not-so) patiently wait for grant funds to become available there are some important steps businesses can be taking now. A careful look at the SBA website has revealed that qualifying entities are required to obtain a Dun and Bradstreet (DUNS) number so they can subsequently register in the System for Award Management (SAM.gov). Other identifiers, such as an Individual Taxpayer Identification Number or Employer Identification Number, cannot be used for the SVOG application. Entities that have or receive a DUNS number are encouraged to immediately begin registering in SAM.gov as the SAM registration may take up to two weeks after submission.
In addition, the SBA recommends that potential applicants gather documentation showing their employee count and monthly revenue so that they can calculate the average number of qualifying employees the entity has had over the prior 12 months. SVOG applicants also will need to determine and document the extent of gross earned revenue loss experienced in 2020 compared to 2019.
How to Register for a DUNS Number
If an organization does not yet have a DUNS number, or no one within the organization knows what it is, visit the Dun and Bradstreet website or call 1-866-705-5711 to register or search for a DUNS number. Registering for a DUNS number is free of charge, so organizations or websites soliciting a fee or charge to acquire a DUNS number likely fraudulent.
Entities will need all of the information listed below to obtain a DUNS number:
- Name of organization
- Organization address
- Name of the Chief Executive Officer (CEO) or organization owner
- Legal structure of the organization (e.g., corporation, partnership, proprietorship)
- Year the organization started
- Primary type of business
- Total number of employees (full and part-time)
Register for a SAM.gov Account
Businesses also need to create a login.gov account, if they do not already have one. A previously issued SAM.gov username and password will not work anymore.
- Create a login.gov account.
- Enter an email address – use the same email address used for SAM.gov (for system and individual federal or non-federal access).
- Have a working phone number (mobile or landline) – login.gov will send a security code for confirmation.
Both of these processes are FREE of charge so businesses should use caution when navigating websites for more information. Many sites claim to be official or advertise expedited SAM processing for a fee. This is not necessary to enter the system. Navigating government websites can be both challenging and frustrating, but it is possible to successfully complete these steps with a great deal of patience and attention to detail. These are not sites that forgive mistakes easily so great attention to detail is crucial for successful registration.
For assistance with both processes, Grants.gov is a helpful tool for step-by-step information, as both of these processes are also required for federal funding through NEA grants. Nonprofit organizations may discover someone in their system has already completed these steps, and only a login.gov registration is necessary.
For even more detailed information on registration, eligibility, definitions, revenue calculations, funding priority, and use of funds please visit the SBA SVOG FAQ site, which was updated with new terms and explanations on February 12, 2021.