The Consolidated Appropriations Act, 2021 (Act) was signed by President Trump on December 28, 2020. Included in the Act is $15 billion in funding reserved for the Small Business Administration (SBA) to make grants to “shuttered venue operators.”
The Act defines eligible entities to include a live venue operator or promoter, theatrical producer or live performing arts organization operator, a relevant museum operator, a motion picture theatre operator or a talent representative that meets certain requirements. The definition of an eligible entity includes nuances for each type of venue operator.
Similar to the Paycheck Protection Program, grants will be provided to eligible recipients that meet certain criteria. Amongst other items, an eligible recipient must demonstrate that it:
Was fully operational on February 29, 2020;
Had a 25% gross earned revenue decline in any 2020 quarter compared with the same quarter in 2019;
Is open or intends to reopen as of the date the grant is received;
Is not owned or controlled by an entity that is publicly traded or received more than 10% of its gross revenue from federal funding during 2019; and
Has not received a Paycheck Protection Program loan after December 27, 2020.
Organizations submitting an application through the SBA for a grant will be required to submit a good-faith certification that the uncertainty of current economic conditions makes necessary the grant to support the ongoing operations. For organizations in operation on January 1, 2019, grants will be awarded in the amount equal to the lesser of an amount equal to 45% of the gross earned revenue of the entity during 2019, or $10,000,000. There is a carve-out to set aside not less than $2,000,000,000 of the total grants for entities that employ not more than 50 full-time workers. Amounts received under this grant must be used for costs incurred between March 1, 2020 and December 31, 2021 and are required to be used for specific expenditures. The list of specific expenditures is extensive and incudes items such as payroll costs, mortgage or rent obligations, utility payments, maintenance, insurance, payments made to independent contractors and administrative costs.
During the first 14-day period, first priority of awarding grants will be for eligible entities whose revenue during the period April 1, 2020 through December 31, 2020 is not more than 10% of the revenue during the same period of 2019, due to the COVID-19 pandemic. A second priority 14-day period will follow for awarding grants with the same criteria but will replace the percentage of revenue at 30%. After these two periods, grants will be awarded to all other eligible entities.
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.
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