American Rescue Plan Act Allows SVOG Recipients to Also Get New PPP Loans

The $1.9 trillion American Rescue Plan Act, signed by President Biden on March 11, solves a timing issue with the Paycheck Protection Program (PPP) and the Shuttered Venue Operators Grant (SVOG) program.

Background

The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (December 27, 2020) provided much-needed relief for performing arts, museums and other live venues that have been shut down due to COVID-19 restrictions. The legislation offered these organizations a choice between the SVOG program or a PPP loan (first or second draw loans post December 27, 2020).

The original legislation provided organizations a choice between the two programs, but a timing difference between a program that ends March 31, 2021, (PPP) or a program with an unknown start date. This false choice caused significant anxiety for otherwise eligible SVOG organizations that feared the SVOG program could run out of funds before their priority tranche was eligible to apply, which could have resulted in an organization receiving neither type of funds if the March 31 PPP deadline passed.

American Rescue Plan Act

The American Rescue Plan Act includes an amendment that allows organizations to apply for and receive both a PPP2 loan and SVOG funds. This will allow organizations to apply for PPP2 before March 31 (there is also a push to extend the PPP application date by at least 60 days).

The amount of PPP loan received will reduce the amount of SVOG received, but this is a common sense approach to solve the challenge of allowing performing arts, museums and other live venues to ensure that they receive the maximum amount of support that Congress intended. The legislation also includes an additional $1.25 billion in SVOG funding.

What should performing arts, museums, and other live venues do now?

1. Review the Shuttered Venues Eligibility Requirements Matrix (added 3/5/2021).
2. Complete the preliminary application checklist (added 3/5/2021). This checklist is extensive, so allow for some time to prepare.
3. Prepare to apply for PPP2 (first or second draw, depending on eligibility) if there is a concern as to timing and availability of SVOG funds.
   1. Consider cost and compliance requirements of PPP2 and whether you would receive full forgiveness.
   2. For first or second priority SVOG applicants, consider whether it is necessary.
   3. For second draw loans, returning to your original lender may be the easiest and most efficient way to apply since they currently have all of your information from your first draw loan.
   4. Many banks are closing applications well ahead of the 3/31 deadline, so you may need to move quickly.

If you have any questions or need help, contact our experts.