The COVID relief bill passed by Congress in late December included important funding and financial relief programs for Denver businesses, families, and individuals. Formally known as the Consolidated Appropriations Act, 2021, it includes financial assistance in the form of extended tax incentives, a re-funded Payroll Protection Program (PPP), new Economic Injury Disaster Loan (EIDL) advances, and expanded tax programs such as the Employee Retention Tax Credit. While useful, many of these have done little to help the struggling live performance, theatre, and venue operators manage through COVID-19. The good news is the relief bill also included a Shuttered Venue Operators Grant (SVOG) program that provides a much-needed financial boost to struggling venues. To help clients, prospects, and others, Hanson & Co has provided a summary of the key details below.
In order to qualify, venue operators need to have been in business as of February 29, 2020, and not have received a PPP loan on or after December 29, 2020. Eligible organizations include museums, zoos, aquariums, cinemas, live venue operators or promoters, talent agents, and theatrical producers. These types of entities owned by state or local government (historic homes or museums) are eligible only if the entity acts solely as a venue and does not include other businesses. For example, a parks department that manages a bandstand while also running various parks would not qualify.
It is important to note those venues presenting live performance in sexual nature and those where more than 10% of gross revenue came from the federal government (not counting disaster assistance) are not eligible to participate.
Calculating Grant Amount
The amount of the grant an applicant can receive is determined by the amount of gross earned revenue from 2019. For an eligible entity in operation prior to January 1, 2019, the grant amount is equal to 45% of 2019 gross earned revenue, or $10M. whichever is less. For those in operation after January 1, the grant amount is equal to the average gross monthly revenue for each full month in operation during 2019 multiplied by 6, or $10M, whichever is less.
When making the calculation, the SBA reminds applicants not to include donations, foundation grants, corporate sponsorships, and individual gifts, as they are considered unearned revenue. It is important not to count contributions and grant revenue as well.
Permitted Fund Usage
Awarded funds can be used to satisfy a variety of expenses, including:
- Payroll Costs
- Rent Payments
- Utility Payments
- Scheduled Mortgage Payments
- Schedule Debt Payments
- Worker Protection Costs
- Independent Contractor Payments (Not to exceed $100,000 per year)
- Maintenance Costs
- State and Local Taxes
- Operating Leases
- Insurance Payments
- Advertising, production transportation, and capital expenses related to producing a theatrical or live performing arts production.
Any expenses for the purchase of real estate, investments, loans, or loan payments that originated after February 15, 2020, are prohibited.
Currently the SBA is building the platform through which applications will be accepted, reviewed, and approved. Currently, there is no application available to review and no timeline for when applications will be accepted. The SBA is encouraging interested parties to gather the necessary documentation on total employees and monthly revenues so accurate calculations can be made now. In addition, any other information such as floor plans, contract copies, and any other evidence necessary for application should also be compiled.
The Shuttered Venue Operators Grant program provides access to financial resources many Colorado venues need to push through the pandemic. We will keep you updated as more details become available. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Hanson & Co can help. For additional information call us at 303-388-1010 or click here to contact us. We look forward to speaking with you soon.