New SBA grant program to provide relief to live venues, museums, movie theaters, promotors and talent reps

By Dan Gauthier | Rose Law Group Reporter

This group of businesses and individuals severely affected by the COVID-19 pandemic receive special attention in the new COVID-19 relief act: live venue operators and promotors, theatrical producers, live performing arts organization operators, museum operators, motion picture theater operators, and talent representatives (referred to as “shuttered venue operators” in the act).

The second COVID-19 relief act, called the “Economic Air to Hard-Hit Businesses, Nonprofits and Venues Act” (Act), was signed into law on December 27, 2020. Among other key changes to the Paycheck Protection Program (PPP), the Act appropriates $15 billion for grants to the so-called shuttered venue operators.

The amount of each grant for eligible grantees can be the lesser of (i) $10 million, and (ii) 45 percent of its gross earned revenue in 2019, or if the grantee was not in operation until after January 1, 2019, the amount equal to average monthly gross earned revenue for each full month the grantee was in operation in 2019, multiplied by 6. As a simple example, an eligible venue operator with $1 million gross earned revenue in 2019 may be eligible for a grant of $450,000 (45 percent of the grantee’s 2019 gross earned revenue).

The Act also authorizes supplemental grants to shuttered venue operators if, by April 1, 2021, its revenues for the most recent quarter are not more than 30 percent of its revenues for the same quarter in 2019. Supplemental grants would equal 50 percent of the initial grant received.

Grants may be used toward payroll costs, rent, utilities, interest and principal payments on a mortgage or other ordinary business debt incurred before February 15, 2020, worker protection costs, independent contractor payments, and other ordinary and necessary business expenses. Notably, the permissible expenses are broader under this grant program than under the PPP.

Grant funds can be used for costs incurred between March 1, 2020 and December 31, 2021 and, if a supplemental grant is awarded, June 30, 2022.
To be eligible, the shuttered venue operator must have been fully operational on February 29, 2020, had at least a 25 percent reduction in gross earned revenue during any 2020 calendar quarter when compared to the same quarter in 2019, and has resumed or intends to resume its operations. These are among several other eligibility requirements. In addition, venues for live events must meet additional requirements including the existence of a defined performance and audience space, mixing P.A. and lighting systems, as well as staffing, marketing and compensation standards.

The Act requires the SBA to issue regulations within 10 days. Although there is no formal guidance on the timing of those regulations as of this writing, the regulations are expected soon.

We will continue to monitor the release of new guidance in the wake of the new Act.