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Article

New Stimulus Provides COVID Relief for Performing Arts, Museums and Other Live Venues

by Katy Brown, Matt Petroski
January 07, 2021

Updated 01/29/2021

On December 27, 2020, the president signed into law a sweeping stimulus program as part of the Consolidated Appropriations Act, 2021. This provides long-awaited relief for many individuals and organizations. Included is a provision of $15 billion for grants to shuttered museums, performing arts and other live venue operators. The legislation is derived from the Save Our Stages Act introduced in the Senate on July 22, 2020, with one primary difference being a reduction in the maximum grant amount from $12 million to $10 million.

Eligibility

An eligible person or entity is a live venue operator or promoter, theatrical producer, live performing arts organization operator, relevant museum operator, motion picture theatre, or talent representative that meets the following requirements:

  • Was fully operational as a live venue on 2/29/2020.
  • Has gross earned revenue during any quarter in 2020 that demonstrates not less than 25% reduction from gross earned revenue of the live venue, etc. from the same quarter 2019.
  • Must receive at least 70% of earned revenue from a cover charge ticketing/entrance fee or make tickets available for purchase by the public an average of not less than 60 days before the date of the event and pay performers in an amount that is based on a percentage of sales, guarantee, or another mutually beneficial form of agreement.
  • Must have certain characteristics of live performance venues, movies theatres, or museums detailed in the legislation.
  • As of the date of the grant, the organization/individual must resume (or intend to resume) organizing, promoting, producing, managing, or hosting future live events. A motion picture theatre must be open or intend to reopen for the primary purpose of public viewing of motion pictures. A museum must be open or intend to reopen. A talent representative must be representing or managing artists and entertainers.
  • Cannot receive a Paycheck Protection Program (PPP) loan after December 27, 2020 (organizations that received a PPP loan prior to that date are not excluded from eligibility).
  • Must certify that the current economic circumstances make the grant necessary for ongoing operations, which is language consistent with the PPP certification language.
  • Excludes entities that are majority owned or controlled by a publicly traded company or received more than 10% of gross revenue from federal funding in 2019 (excluding amounts received by the venue, etc. under the Robert T. Stafford Disaster Relief and Emergency Assistance Act).
  • Excludes entities of the state or political subdivision other than the live venue operator, promoter, theatrical producer, live performing arts organization operator, relevant museum operator, motion picture theatre operator, or talent representative.
  • Excludes for-profit museums.
  • Excludes large operators, which is an entity owned or controlled by an entity with two or more of the following characteristics: 1) owns or operates venues, etc. in more than one country, 2) owns or operates venues, etc. in more than 10 states, or 3) employs more than 500 FTEs as of February 29, 2020 (FTE is defined as 30 hours/week and 0.5 FTE is 10-30 hours/week).
  • Excludes organizations that present live performances of a prurient sexual nature or derive more than de minimis gross revenue through sale of products or services, or presentation of any depictions or displays of a prurient sexual nature.
  • The Small Business Administration (SBA) is required to submit a report to the Senate and House Small Business Committees 45 days after enactment detailing their oversight and audit plan for the program and provide monthly updates.

Amounts and Timeline

The grants will be awarded in the following phases (initial and supplemental grants):

Initial Grants - First Priority

  • Awarded during the initial 14-day period of the program.
  • Recipients must have a revenue decrease due to COVID-19 between April 1, 2020, and December 31, 2020, of at least 90% from the same period in 2019.
  • Revenue is calculated based on accrual method, but the SBA may use an alternative method if there is a seasonal impact of excluding January through March from the calculation.
  • The amount of the grant is the lesser of 45% of gross earned revenue during 2019 or $10 million (modified calculation if not in operation prior to January 1, 2019).
  • Not more than five affiliates may receive initial grants.

Initial Grants - Second Priority

  • Awarded during the second 14-day period of the program.
  • Recipients must have a revenue decrease due to COVID-19 between April 1, 2020, and December 31, 2020, of at least 70% from the same period in 2019.
  • Revenue is calculated based on accrual method, but the SBA may use an alternative method if there is a seasonal impact of excluding January through March from the calculation.
  • The amount is of the grant is the lesser of 45% of gross earned revenue during 2019 or $10 million (modified calculation if not in operation prior to January 1, 2019).
  • Not more than five affiliates may receive initial grants.

Supplemental Grants

  • Awarded after the 28-day initial grant period of the program.
  • There is a set-aside (at least $2 billion) for small businesses with not more than 50 FTEs.
  • Organizations that didn’t receive an initial grant are eligible if earned revenues are reduced by at least 25%.
  • Initial grant recipients can receive 50% of their initial grant amount (eligible if at least 70% earned revenue decrease from the most recent quarter as of April 1, 2021 compared with the same period in 2019).
  • Total grants (initial and supplemental) cannot exceed $10 million.

Use of Funds

Funds are to be used for costs incurred during 3/1/2020 to 12/31/2021, but there may be an extension for supplemental grant spending. Allowable expenses include: payroll costs, covered rent obligations, covered utility payments, scheduled payments of interest or principal on any covered mortgage obligation, scheduled payments of interest or principal on any indebtedness or debt instrument incurred in the ordinary course of business that is a liability of the eligible person or entity and was incurred prior to 2/15/20, covered worker protection expenditures, payments made to independent contractors not to exceed $100K for any individual employee of an independent contractor, and other ordinary and necessary business expenses Prohibited expenses include: purchase of real estate, principal or interest on loans originated after 2/15/2020, investment or re-lending of the funds, and contributions or expenditures to or on behalf of any political party, committee, or candidate for elective office.

The Takeaway

The details of the application process and when the initial grant period will open are not yet available. We continue to monitor developments but recommend that organizations move to identify whether they qualify for the program. Ultimately, qualifying organizations will need to choose between this program or the PPP, but many performing arts venues and museums that have been unable to operate or must operate at a significantly reduced capacity will find the shuttered venue grant program to have fewer requirements and a larger potential maximum ($10 million vs. $2 million).

Update 1/29/2021

The SBA backtracked on its initial timeline that required qualifying organizations of 51 employees or more to wait until day 61 of the application program and clarified that the SBA will reserve no less than $2 billion of program funding for grants to entities that have no more than 50 employees. The new timeline is below:


First Priority
1st 14 days of grant awards Entities that suffered a 90% or greater revenue loss between April 2020 through December 2020 due to the COVID-19 pandemic.
Second Priority
Next 14 days of grant awards Entities that suffered a 70% or greater revenue loss between April 2020 through December 2020 due to the COVID-19 pandemic.
Third Priority
Beginning 28 days after First & Second Priority Awards are made Entities that suffered a 25% or greater revenue loss between one quarter of 2019 and the corresponding quarter of 2020.
Supplemental Funding
Available after First & Second Priority
Recipients of First and Second Priority round who suffered a 70% or greater revenue loss for the most recent calendar quarter (as of 04-01-21 or later)

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


January 07, 2021

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