The new COVID-19 Relief Act has set aside $15 billion to be given out as “grants for shuttered venue operators”. This includes many types of nonprofit arts and cultural organizations such as performing arts organizations, theatrical producers, certain types of “relevant” museums and others. “Relevant” museums generally include arboretums, botanical gardens, art museums, children’s museums, general museums, historic houses and sites, history museums, nature centers, natural history museums, science and technology centers, specialized museums and zoological parks.
How will grantees be prioritized? These grants are going to be distributed by the SBA in three rounds as follows:
- First 14 days– For those entities with a loss of “earned revenue” of at least 90% from 4/1/20 through 12/31/20, as compared to the same period in 2019.
- Next 14 days– For those with a loss of at least 70%
- After the first 28 days– All others (note that the first two rounds cannot exceed 80% of the total available)
What are the requirements to qualify for the grant? Applications aren’t available yet, but the act notes the following requirements:
- Must have been fully operational on 2/29/20
- Must have one calendar quarter in 2020 where your “gross earned revenue” was 75% or less than the earned revenue in the same quarter in 2019.
- Grantee has resumed or intends to resume its operations
- Venue must have a defined performance space, equipment, staff, marketing, and must pay artists fairly (even museums must have at least one auditorium with fixed seating and regular programming).
- For Live Operators, the primary business activity must be to organize, promote, produce, manage or host live concerts, shows, theatrical productions, or other events by performing artists and either: (1) at least 70% of the “earned revenue” of the entity must be generated through ticket sales, nonprofit educational initiatives, or the sale of event food/beverages/merchandise, OR (2) must make tickets available for purchase by the public an average of not less than 60 days before the event
- The entity can’t have received a PPP loan after 12/27/20 (which includes the second round of PPP funding)
Do we have to use the funds for something specific? Just like the PPP funding, these grants may only be used for certain types of expenses. However, unlike the PPP funding, the types of expenses are more broad including payroll costs, rent, leases, utilities, scheduled principal and interest payments on mortgage or other debt that was incurred before 2/15/20, contractor payments (up to $100K for individual) and other ordinary business expenses (such as maintenance, administrative, insurance) incurred from 3/1/20 to 12/31/21.
How much can we get? The maximum grant amount is $10M or 45% of “gross earned revenue” in 2019.
Is a certification required, like with the PPP funds? A “good faith certification” is required with the application which states that “the uncertainty of current economic conditions makes necessary a grant to support the ongoing operations of the grantee”.
Colette, Kamps, CPA