The Consolidated Appropriations Act of 2021, signed into law in late December 2020, included Section 324 titled – Grants for Shuttered Venue Operators. This section also known as the Save our Stages Act provides for up to $15 billion in grants to be administered by the Small Business Administration for; live venue operators or promoters, theatrical producers or live performing arts organization operators, a relevant museum operator, a motion picture theatre operator, or a talent representative that meets certain requirements.
As noted above, the Act provides benefits to many different businesses involved in the entertainment industry and contains specific requirements and restrictions applicable to the businesses mentioned above. This article is meant to focus primarily on the Save our Stages Grants and the eligibility requirements and restrictions applicable to theatrical productions.
Please contact us for additional information on other eligibility requirements and restrictions for producers themselves and or other mentioned entertainment businesses. You should also refer to our memorandum “Employee Retention Credits and How They Interact with Other Benefits” for additional information on other programs that may be available.
We are anticipating additional guidance from the SBA, including a draft of the Grant application and additional clarification of some of the bill language. It is currently unclear when this will be forthcoming. There remain many unanswered questions and areas open to interpretation. We may be recommending that you obtain legal counsel to assist with some of the specifics.
For theatrical productions the requirements are that the theatrical production:
Amount and Timing of the Grants
The total maximum amount of Grants that a theatrical production can receive is $10,000,000 during both an application for an initial grant and any supplemental grant. Most theatrical productions that had operations in 2019 will be eligible for an initial grant. For an eligible production that was in operation on January 1, 2019, the Grant is equal to 45% of the gross earned revenue of the entity during 2019, and for a production that began operations after January 1, 2019, an amount equal to 6X the average monthly gross earned revenue for each full month of 2019 that the production was in operation. In both cases capped at a maximum of $10,000,000.
If the $10,000,000 maximum is not obtained in the initial grant, the production may receive a supplemental grant, if, as of April 1, 2021, the production’s revenue for the first quarter of 2021 is not more than 30% of the revenue for the first quarter of 2019. The supplemental grants are equal to 50% of the initial grant amount, and again there is a cap of $10,000,000 total for initial and supplemental grants combined
Supplemental grants can only be applied for after 60 days of processing of initial grants. As it is expected there will be significant applications for initial grants, there may be no funds available for supplemental grants.
Based on affiliation rules, the total amount of grants that affiliated entities can receive is limited to 6 entities at a maximum of $10,000,000 per affiliated entity, or a maximum total of $60,000,000.
Initial Priorities for Awarding Grants
Under the program SBA will make grants in the following order of priority;
During the initial 14 day period of grant making SBA will only make grants to applicants with revenue for the period from April 1, 2020 through December 31, 2020 that is not more than 10% of the applicant’s revenue during the same period of 2019 due to the COVID-19 pandemic.
During the next 14 day period the SBA will make grants to applicants with revenue for the period from April 1, 2020 through December 31, 2020 that is not more than 30% of the applicant’s revenue during the same period of 2019 due to the COVID-19 pandemic.
Thereafter, all eligible grants will be considered.
Not less than $2,000,000,000 of the total amount of grants made available is intended to be awarded to eligible persons or entities which employ not more than 50 full-time employees.
Permitted Use of Grant Funds
Initial grants may be used for specified costs incurred between March 1, 2020 and December 31, 2021. Any unused funds will need to be returned to the SBA.
Specified costs (those related to theatrical productions) include;
Grant funds cannot be used to purchase real estate, for investment, or for lending.
Steps you should be taking now
We have had no indication of when the SBA will release additional guidance and or make grant applications available. However, based on the information we know each theatrical production should:
We believe the best course of action will be to apply for the maximum grant in the initial rounds. We will then need to track the appropriate expenses against the grant amount. Without further guidance, we are anticipating taking up to 50% of remounting costs under item 6f above in Specified costs. After that, use of the grant money will be limited to the other Specified costs above.