Recently, the $900 billion COVID-19 Relief Bill passed by Congress and signed by the President obscured some very welcome help for theaters, music venues, museums, and similar "closed places" and promoters ("Act") .
This assistance started with the "Save Our Stage Act", which authorized the Small Business Administration (SBA) to provide grants of up to $15 billion to help this economically sluggish sector.
"Qualified individuals or entities" (including on-site venue operators or promoters, theater producers, on-site performing arts organization operators, related museum operators, cinema operators or talent representatives) should be able to apply for relief from SBA as soon as possible (as of today , SBA has not yet started accepting applications).
To be eligible, grantees must meet several criteria, including: (i) Fully operational on February 29, 2020; (ii) Their “total revenue” in the fourth quarter of 2020 is at least at least 25% lower; (iii) they intend to continue or resume operations; (iv) they are not an entity that issues securities on the national stock exchange, or is not an entity that is owned or controlled by the majority, or the entity will receive federal funds in 2019 Received more than 10% of its income (except for disaster relief). Non-profit venues may be eligible to participate even if they host free events, but these events must be produced and managed by paid employees rather than volunteers.
In addition, to be eligible, an individual or entity (or an entity that owns or controls the entity) must
Has the following characteristics: (i) related businesses or assets in more than one country; (ii) related businesses or assets in more than ten states; (iii) as of February 29, 2020, more than 500 employees were employed ( According to the provisions of the Act, it is determined as a full-time equivalent position).
Crucially, qualified recipients also cannot obtain a “secondary withdrawal” Payroll Protection Program (PPP) loan on or after the effective date of the bill (December 27, 2020). If available, the grant to close the premises may be more attractive than the second PPP loan, because this grant is not only a real grant, not a potentially forgivable loan, and the maximum amount of relief ($10,000,000) is higher than The maximum withdrawal amount for the second PPP. Loan ($ 2,000,000).
The Act covers each category of eligible individuals or entities ("live performance venue operators or promoters, theater producers, live performing arts organization operators, related museum operators, cinema operators or talent representatives") A specific definition is given. Potential applicants should read these definitions carefully. Generally, these definitions are designed to ensure that eligible individuals or entities are real businesses or non-profit organizations engaged in major artistic and dramatic activities that the Act is intended to support.
For example, "relevant museums" must be non-profit organizations, must have professionals, and regularly display tangible items to the public. The “relevant museum” must also have an exhibition space that is an integral part of its main business activities and is subject to occupancy restrictions related to the pandemic. In addition, it must "have at least 1 auditorium, theater, performance hall or lecture hall, with fixed audience seats and regular program arrangements."
The bill directs the SBA to only grant grants to eligible individuals or entities within the first 14 days of the program, whose income is 90% lower than income due to COVID-19 between April 1, 2020 and December 31, 2020. The income of individuals or entities in the same period in 2019. In the next 14 days, grants will be provided to eligible individuals or entities whose income has fallen by 70% due to the COVID-19 pandemic. After these two periods, grants can be granted to other eligible individuals or entities (including entities whose income has fallen by less than 70%). For some larger non-profit organizations, the income reduction test may be a problem. These organizations have received large amounts of income or donations from charitable donations, and this income may not have fallen sharply due to the pandemic.
In addition to small organizations, US$2 billion of the US$15 billion provided under the Act will be allocated to qualified personnel or entities with less than 50 full-time employees.
The amount of relief available to qualified recipients depends on how long the recipient has been in business. For eligible recipients that started operations on January 1, 2019, the initial grant provided by the SBA under the Act will be (a) 45% of total revenue in 2019 or (b) US$10,000,000, whichever is less. For eligible recipients who start operations after January 1, 2019, the initial grant will be the smaller of (a) 2019 average monthly gross income multiplied by 6 or (b) 10,000,000. Eligible recipients who meet certain conditions may be eligible for additional "supplemental" grants, provided that the sum of eligible recipients does not exceed a maximum of $10,000,000.
Also, please note that if an entity receives a grant under this law, it is not eligible for a new PPP loan, except for the grant. Interested entities should compare their eligibility for the highest grants received under the Act with the proceeds from exempt PPP loans, how each plan limits the use of funds, and then decide on its application process.
The recipient must use the grant to pay for eligible expenses incurred in the 22 months from March 1, 2020 to December 31, 2021. For those eligible recipients who have received supplementary grants under the Act, the period of validity of the combined grants obtained will be extended to June 30, 2022. Grants can be used for several items outlined in the "Wage Protection Plan", including wage costs, certain rental obligations, utility payments and mortgage obligations. Funds can also be used for daily and necessary business expenses, such as maintenance expenses, administrative expenses, state and local taxes, insurance money and advertising, production and transportation, and other capital expenditures related to the production of performing arts products. Grant
It can be used to purchase real estate, repay loans issued after February 15, for investment or for political parties/candidates.
The bill instructs the SBA to start and run the program within 21 days, but it may take more time to fill in many key details and create a new application form and verification process. Please sign up with Lathrop GPM lawyers to help them browse the details of the "Save Our Stage Act" or "Second Withdrawal" salary protection plan.
Section 324 of Part N of the Comprehensive Appropriation Act of 2021 (Other Responses and Remedies to Coronavirus), HR 133 (Registered Act), PL 116-260
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Disclaimer: Due to the general nature of this update, the information provided here may not be applicable to all situations, and no action should be taken on this information without specific legal advice based on specific circumstances.
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