The Consolidated Appropriations Act, 2021 (the Act) has many provisions, including $15 billion reserved for the Small Business Administration (SBA) to make grants to eligible persons or entities operating in the entertainment industry.
More specifically, eligible recipients must be one of the following:
- Live venue operator or promoter
- Theatrical producer
- Live performing arts organization operator
- Relevant museum operator
- Motion picture theatre operator
- Talent representative
And must have both of the following apply:
- You were fully operational on February 29, 2020.
- Your gross earned revenue during first, second, third or, only with respect to applications submitted after January 1, 2021, fourth quarter 2020 is at least a 25% reduction from the gross revenue earned during the same quarter in 2019.
How much can be granted per eligible recipient?
If qualified, the SBA will award an Initial Grant equal to 45% of gross earned revenues in 2019. If the eligible person or entity began operations after January 1, 2019, the Initial Grant is equal to 45% of the average monthly gross earned revenue for each full month in operation in 2019, multiplied by six.
A second grant (referred to as the “Supplemental Grant”) equal to 50% of the Initial Grant is also available if, as of April 1, 2021, the revenues of the eligible person/entity for the most recent calendar quarter are less than 30% of the revenues in the same calendar quarter during 2019. The total of both initial and supplemental grants cannot exceed $10,000,000.
What is the timeline for receiving a Shuttered Venue Grant?
During the first 28 days, the SBA will only award grants for eligible persons/entities showing a greater than 70% decline in revenues when comparing 2020 to 2019. (Eligible participants showing a greater than 90% reduction, will get priority during the first 14 days.)
Following the initial 28 days, the SBA may award Initial Grants to any eligible participant. After the SBA has processed all Initial Grants submitted within the first 60 days, applications for the Supplemental Grants will be accepted.
An eligible person/entity of the Initial Grant must return any amount received that is not expended on or before one year after the date of the disbursement of the grant. If the eligible person/entity receives a Supplemental Grant, the recipient must return any remaining funds that are not expended on or before 18 months after the date of the disbursement of the initial grant.
What type of expenditures are allowable and what are not?
Allowable expenses include:
- Payroll costs
- Rent, utilities or mortgage interest and principal
- Interest on other debt outstanding prior to February 15, 2020
- Covered worker protection expenses
- Up to $100,000 in payments to independent contractors
- Other ordinary and necessary business expenses, including maintenance, administrative expenses, state and local taxes, insurance premiums, advertising, production or transportation
- Capital expenditures relating to producing a theatrical or live performing arts production, concert, exhibition or comedy show. (However, the grant may not be used primarily for these expenditures.)
Prohibited expenses include:
- Purchase of real estate
- Payment of interest or principal on loans originated after February 15, 2020
- Investing or re-lending
- Political contributions
- Any other use that may be prohibited by the SBA
Is the grant taxable, and are associated expenses deductible?
The Act provides that the grant income under this Act is tax exempt income, while related expenses remain deductible.
Connect with an Advisor
Warren Averett is continuing to monitor these provisions, and we will continue to keep you informed as information is made available. If you have questions about how these provisions impact your business, please reach out to your Warren Averett advisor, or have a member of our team reach out to you.