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For small businesses in the arts, this new grant program may be better than PPP

By January 26, 2021No Comments

(This post originally appeared on The Philadelphia Inquirer)

If your company is in the arts industry and needs financial help – and who doesn’t? – it’s possible that a Paycheck Protection Program loan may not be your best option. Instead, you should probably be looking into the Shuttered Venue Operator Grant Program.

Thanks to the stimulus bill passed at the end of 2020, the Small Business Administration has put aside $15 billion targeted at businesses in the arts industry, specifically live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, some zoos and aquariums, motion picture theater operators and talent representatives.

Here’s the most important thing: The $15 billion is not for loans. It’s for grants. So the money doesn’t have to be paid back, as long as the rules are followed.

To be eligible, you would have to show that your business has suffered a 25% decline in revenues between April 2020 through December 2020 due to the COVID-19 pandemic. Small businesses also get priority: $2 billion has been reserved for businesses with fewer than 50 full time employees. The program hasn’t opened yet, but will do so shortly. When it opens, priority will be given to those in the industry who have suffered the steepest revenue declines.

Assuming you’re eligible, there’s a lot of funding available. If your business was in operation on January 1, 2019, you can get an amount equal to 45% of the gross earned revenue during 2019. If your business began operations after January 1, 2019, your funding would be equal to the average monthly gross revenue for each full month your business was in operation during 2019, multiplied by 6. The maximum initial grant in either case is $10 million. However, supplemental grants equal to 50% of the prior grant may also be available. So some companies could receive as much as $15 million under the program.

How important is this for Philadelphia’s arts community? Considering the dramatic impact that the pandemic had on this industry, very.

“For many Philadelphia theaters who have buildings, the grant program is very important to offset the costs of having a building during this time when they cannot be used, but still require mortgage, utilities, etc.” says LaNeshe Miller-White, Executive Director of Theatre Philadelphia, a nonprofit advocacy group for theater in the area. Miller-White also points out that since payroll and payments by these companies to independent contractors are allowed with the funds, we’ll “hopefully see theater workers reaping the benefits as well and seeing more work.”

Christopher Collier, Executive Director of Renew Theaters, a nonprofit that currently operates four movie theaters in Pennsylvania and New Jersey, agrees. “This grant would make an incredible difference toward the future sustainability for our venues,” he says. “The funding would give us the resources to not only replenish our losses from being closed for nearly a year, but also provide us the safety net needed to get through 2021.”

For those that do receive grants, there will be rules to follow. They will have to use the grant money for specified expenses such payroll, rent, utilities, most scheduled mortgage and debt payments as well as worker protection costs, the aforementioned payments to independent contractors (with a cap of $100,000 annually per contractor) as well as most local taxes, operating costs and insurance payments. Marketing and capital expenditures related to a production are also allowed. However, the funds can’t be used to buy real estate, pay back loans that originated before February 15, 2020, make investments or give political contributions.

“These funds would first and foremost allow us to rehire and provide support to our staff,” Collier says. “We will also use the funds to pay rent, taxes, and other operations expenses that have continued to pile up, even while we have been closed. We need to bring our staff back to the theater – both to provide them support and an income – and we also need our highly trained team back in place before we reopen.”

Until the final rules are issued, it appears that the grants, as welcome as they are, may still not help all those in the industries that are truly in need. Based on the current rules, it appears that individual actors, technicians and other contractors – although eligible to receive payments from companies that employ them – will not be able to apply directly for grants. Those workers would likely need to continue to rely on unemployment. Others in the industry may also not benefit.

“It is unclear to me at this time if the grant program will be beneficial to theater producers with non-traditional models (outdoor, for example),” says Miller-White. “Or for those who rented space or don’t have their own venues, but still have expenses, have seen a loss in revenue, and continue to operate virtually.” Those clarifications will need to be addressed.

The program also has other exclusions, such as companies with more than 500 employees, theater owners that received a Paycheck Protection Program loan after December 27, 2020 and startups that began operations after February 29, 2020.

For those that are eligible, the money could not be coming at a better time. Collier says that his theaters have been closed since March 2020 and saw a 75% drop in income compared to 2019. Without the help of their community of members and patrons, revenues would have been off by a staggering 95%. Which is why he plans to apply for this program as soon as the doors are open.

“We are still waiting on the final details of the grant and application portal to open,” he says. “We have been busy, however, compiling as much information we can so that we are ready when that happens.”

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