In December 2020 Congress passed new legislation called the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues (“Economic Aid Act”). Section 324 of the legislation authorizes $15 billion for the SBA in direct grants to eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives who demonstrate a 25% reduction in revenues. Congress incorporated the Save Our Stages Act into Section 324 as part of the COVID relief package.
An applicant must meet certain eligibility and revenue requirements. These are similar to the PPP Second Draw loan standards with some significant differences as to eligibility. The applicant must have been in operation as of February 2020. It must establish that it had at least a 25% reduction in earned revenue during a quarter in 2020 compared with that same quarter in 2019. If the applicant does not have quarterly reports, it may compare tax returns from 2019 and 2020. Those with significant need will be considered first.
The amount of the grants to an applicant shall be the lesser of 45% of gross revenue in 2019 or $10 million. There are set-asides in the legislation of $2 billion for companies with 50 or fewer employees. Further, there is a provision for supplemental grants for qualifying companies who have experienced quarterly revenue losses of at least 30% as of April 1, 2021.
A recipient of a grant shall agree to use the funds to pay independent contractors, advertising, production, transportation, certain mortgage and debt payments, state and local taxes and fees, maintenance expenses and administrative costs. The grant cannot be used for things such as repaying loans made after a certain date, investing or re-lending funds or donating to political parties/candidates.
The COVID relief bill also extends Pandemic Unemployment Assistance to March 14, 2021. This will permit self-employed artists and independent contractors to receive unemployment compensation for the first time. There will be additional payments of $300.00 to eligible applicants and the period for receiving benefits will be extended.
For more detailed information on the grants and how the new relief program can benefit you and/or your company, please contact Shulman Rogers.
The contents of this Alert are for informational purposes only and do not constitute legal advice. If you have any questions about this Alert, please contact the Shulman Rogers attorney with whom you regularly work or a member of the Shulman Rogers team.
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