The largest pool of federal arts funding in U.S. history sits untapped as strapped Atlanta venue operators wait for federal officials to unveil the application process.
“It is unequivocally going to help us, and we have done everything possible to prepare,” says Eddie Owen, owner of Eddie Owen Presents: Red Clay Music Foundry in Duluth. He estimated its revenue is down 85 percent from a year ago. “The money is sitting there and no venue in America can use it because there is no application for us. Of course it’s frustrating, but everything since March has been frustrating.”
The $15 billion Shuttered Venue Operators funding is part of the federal stimulus approved December 27, and it empowers the federal Small Business Administration to grant performing-arts venues grants to offset the financial devastation of the COVID-19 pandemic. A shuttered venue grant will cover up to 45 percent of a venue’s gross earned revenue from 2019 with a $10 million cap.
Eligible applicants include operators (and some producers, promoters and talent representatives) of live venues, theaters, museums, zoos and aquariums.
The federal government, however, has yet to release the shuttered venue grant application guidelines.
“It’s been a bit challenging, to be honest,” says Lara Smith, managing director of Dad’s Garage Theatre Company. “We are in a holding pattern. We don’t know when we are reopening, and the longer it is, the tougher the decisions we have to make. The shuttered venue grant would set us up for the most success while taking care of our people right now. We’re excited, but we don’t know when we will get the information we need.”
For Smith, the vagueness around the grants recalls the aftermath of the federal funding last year through the Coronavirus Aid, Relief and Economic Security (CARES) Act.
“We kept looking for who was the expert, then accepted there were none and so we all are,” she says. “What else can you do?”
A lot of question marks
Of the $15 billion available, $2 billion is reserved for operators with no more than 50 employees, and those grants will be “issued in the first 60 days to aid those venues that have been hit the hardest,” says Barb Carson, deputy associate administrator for the Small Business Administration. “The team here has been hard at work getting this program organized and ready to launch as soon as humanly possible.”
Another uncertainty: the legislation is very clear about how to define full-time employees, but the information on the Small Business Administration website is not, Smith said. That definition matters to venues like Dad’s Garage, which wants to make sure it qualifies for the priority funding earmarked for operators with no more than 50 employees. Dad’s has 16 full-time employees and 117 additional employees.
“There are a lot of question marks,” she says. “And it was crazy timing too because of [President] Biden coming into office, and how is that going to impact how they roll this out?”
Entities owned by state and local governments could be eligible, and Carson says the Small Business Administration is clarifying requirements.
In an email, Andrea Roebker, regional manager for the administration, says that the agency is “working expeditiously” to “appropriately update guidance and systems for the Shuttered Venue Operators Grant program. We are committed to ensuring the relief programs launch as quickly as possible to deliver critical economic aid to America’s small businesses, live venue operators and promoters, independent theaters and cultural institutions.”
She says that anyone who wants to stay updated should follow the agency on Twitter, subscribe to its e-newsletter and visit its coronavirus information website. The agency will also host pre-application webinars to explain the process and questions can submitted to SVOgrant@sba.gov.
Navigating federal programs
The shuttered venue grants could dwarf the federal stimulus funding from the Paycheck Protection Program (PPP) loans that benefited facility operators and employees in its first round in 2020.
Smith says Dad’s Garage plans to apply for a shuttered venue grant of $618,000, almost triple the $222,732 it received from the first PPP loan. A second round is underway, but some communications from the federal government indicate that any venue operator who applied for another PPP after December 27 will be automatically excluded from applying for a shuttered venue grant.
“That’s a further complication, because no one intended to double dip,” Smith says. “We need all irons in the fire, and organizations are really trying to figure out which one to go for.”
Also unclear is the shuttered venue grant’s bearing on another federal lifeline: the Employee Retention Tax Credit, which reduces the business taxes related to wages and health-care benefits. The tax credits could be worth $88,000 to Dad’s Garage if the federal government allows organizations to apply for those and the shuttered venue grants.
The Small Business Administration also offers Economic Injury Disaster Loans, which do have to be repaid.
“We’re getting a lot of questions about whether applicants are eligible for more than one and how to decide between them,” Pat Gibson, senior adviser for the Small Business Administration says in a recent webinar. “And we understand this is a big issue for everybody. Each program has unique eligibility requirement criteria and restrictions on how the funds can be used. Some of the programs require repayment, some do not. Finally, the application period for each one varies, as does the time frame and whether the proceeds can be used for expenses.”
She says her team was working on a matrix to be posted to the agency website that would help shuttered venue operators decide on what funding made the most sense for them to apply for.
Americans for the Arts and other national advocacy groups are trying to keep shuttered venue operators updated. On January 22, for instance, agency executive director Nina Ozlu Tunceli warned arts organizations in an email not to apply for PPP if they expected to apply for a shuttered venue grant. She forwarded an email sent by the agency to field offices urging, “If you have constituents this could affect please let them know.”
Dad’s Garage’s strategy, according to Smith, is simple: “Have all of our docs ready and wait as long as we can to see if shuttered venue funding application comes out, and when it does, apply with a drop of the hat and put all our eggs in that basket.”
A Band-Aid of unknown size and effectiveness
A shuttered venue grant will cover income lost over a longer period of time than the PPP loans, allow for broader use of funds and will not have to be repaid (PPP loans offer forgiveness). The shuttered venue grant is based on a facility’s 2019 average monthly income, multiplied by six.
The passage of the $15 billion bailout was greeted with “a lot of champagne bottles and glasses clinking,” says Greg Green, general manager of The Masquerade, which last hosted a show on March 13, 2020.
“We are exactly an example of the type of business it was crafted for,” he says. “It will apply to most any business expenses — rent, payroll, insurance, licensing, general maintenance and repairs. It is broad, but that’s what it’s meant to be. It’s a Band-Aid to try to get live entertainment, comedy venues, performing arts and theatrical groups, and some museums to the point where en masse gathering happens again.”
At Red Clay Music Foundry, Owen has been hosting socially distanced shows with no more than 50 patrons in his 260-seat venue, and remote fans pay for livestreams of performances, but this only adds up to 15 percent of his revenue from a year ago. He also uses the bandage analogy.
“This money is like . . . in a pack of Band-Aids with 14 sizes, you pick out the smallest little bitty round circle,” Owen says. “That’s what it’s going to be. It gives us another day to breathe. It might be a day or month or two months or three months or six months.”
Owen says he doesn’t want to criticize the government’s programs and that venues desperately welcome the help. “I appreciate them looking out for us, seeing our noses barely above the waterline and about to sink any second, and earmarking these funds for us,” he says. “We’re all in the same boat, we all want to survive and pray we can stay open. Until we get back to normality, this is devastating for the songwriters, the performing people, the touring artists and the players, pickers and grinners.”
Smith says that the economic activity from arts and culture make up 4.5 percent of the U.S. gross domestic product, which in 2017 equaled $878 billion.
“When you think of the scale of $15 billion, it’s pretty incredible,” she says. “And when you realize who is eligible, how far will that $15 billion get? We’re talking about Broadway venues and movie theaters. While it’s important to underscore how transformative $15 billion could be, will it be enough?”