Much Needed Help for Entertainment Venues Included in Recent Stimulus Bill01/04/2021
While we are all in the same ocean, we aren’t all in the same boat when it comes to the impact the pandemic has had on our lives and businesses. One of the types of businesses particularly hard hit has been live entertainment venues and cultural institutions, which have been all but shuttered due to social distancing requirements for most of 2020. To help these venues and the people who own and manage them, Section 324 of the Additional Coronavirus Response and Relief Act, titled “Grants for Shuttered Venue Operators,” provides $15 billion in relief funding, including $2 billion of which is earmarked specifically for venues that employ no more than 50 staff members during the first 60 days of implementation.
- Live venue operators and promoters
- Theatrical producers
- Live performing arts organization operators
- Relevant museum operators
- Motion picture theater operators
- Talent representatives
Each of these categories have specific definitions, so potential applicants need to pay close attention to the language when determining eligibility. For example, “live venue operator” is an entity or individual that organizes, promotes, produces, manages, or hosts live concerts, comedy shows, theatrical productions or other events by performing artists. The venue must generate at least 70% of its revenue from cover charges, ticket sales, production fees or food, beverage or merchandise sales as well as pay performers an amount based on a percentage of sales, a written guarantee or “another mutually beneficial formal agreement.” A “relevant museum” includes nonprofit zoos, aquariums, botanical gardens, art museums, children’s museums, historic homes or sites, nature centers and others as defined by the Museum and Library Services Act.
Those that do qualify, must also meet additional requirements, including:
- Being fully operational on February 29, 2020
- Experienced a 25% (or more) decline in revenue in any 2020 quarter compared to the same quarter in 2019
- Is currently open, or plans to reopen, on the date the grant is received
- Is not owned or controlled by a publicly-traded entity or has not received more than 10% of its gross revenue from federal funding during 2019
- Has not received a PPP loan
Grant Amounts Available
Those that meet the qualifications can apply for a maximum grant of 45% of gross revenues for the 2019 calendar year with a $10 million cap. Supplemental grants are also available to those that had gross revenue for the most recent calendar quarter that is no greater than 30% of the gross revenue for the same quarter in 2019.
Grants will be awarded to those that were hardest hit first. For example, funds awarded in the first two weeks will go to those that have experienced a 90% or larger loss in gross revenue due to the pandemic, followed by those that suffered a 70% or greater loss in the second 14-day period. After those have been awarded, other entities that are eligible will receive their grants.
How Can Grant Funds be Spent?
Allowable expenses under the program are:
- Mortgage interest or principal (not including principal pre-payment)
- Covered worker protections
- Independent contractor payments
- Maintenance and administrative costs
- State and local taxes
- Operating leases in effect as of February 15, 2020
- Insurance premiums
- Production costs, including advertising, transportation and capital expenditures.
Initial grants can be used to cover expenses incurred between March 1, 2020 and December 31, 2021 and supplemental grants can be used for expenses that occurred between March 1, 2020 and June 30, 2022. Anyone who receives grant funds is required to keep four years of employment records and three years of business records after receiving the grant.
These grants will be administered by the Small Business Administration, much like PPP loans, and Congress requires that they develop an oversight and audit plan to ensure the funds go to those that truly qualify.
We will update you as more information, including how to apply. If you have any questions, don’t hesitate to reach out to us and we will do all we can to help.