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COVID-19 Stimulus Package Provides Grants for Shuttered Entertainment Industry Venues and Businesses

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On December 27, 2020, the $2.3 trillion coronavirus relief stimulus package was signed into law, providing a wide range of benefits, grants, and payments for various businesses and individuals. While significant attention has been given to direct payments, enhanced unemployment benefits, and renewal of the Paycheck Protection Program ("PPP"), the 5593-page bill also includes a unique grant program for shuttered venues and other entertainment industry businesses.

Section 324 of the Consolidated Appropriations Act, 2021 sets forth the terms of the grant program, which provides $15 billion in funds for:

  • Venue operators and promoters;
  • Theatrical producers;
  • Live performing arts organization operators;
  • Certain museum operators;
  • Motion picture theater operators; and
  • Talent representatives

Below are answers to some frequently asked questions about the Section 324 grant program.

Am I Eligible for a Shuttered Venue Grant?

To be eligible, the business must:

  • Have been in operation on February 29, 2020;
  • Intend to resume operations; and
  • Be able to demonstrate a reduction in quarterly revenue of at least 25% in one quarter of 2020 as compared to the same quarter in 2019.

The revenue reduction requirement mirrors a similar requirement for second-draw PPP borrowers, and the grant program also has similar restrictions to PPP on use of funds (e.g., payroll costs, covered rent/utility/mortgage payments), with a broad catch-all for other "ordinary and necessary business expenses." These similarities may arise in part due to the fact that receiving a grant under Section 324 disqualifies a recipient from receiving a PPP loan.

In addition to the above requirements, the grant program is not available to entities that received more than 10% of gross revenue from Federal funding in 2019, or certain larger entities (including those with venues in more than one country, more than ten states, or with over 500 employees).

The program is currently limited to the entertainment industry - to the exclusion of venues, promoters, and agents/managers operating exclusively in the sports industry. The definition of "live venue operator" references "live concerts, comedy shows, theatrical productions, or other events by performing artists…" while the definition of "talent representative" is limited to agents or managers that book or represent "musicians, comedians, actors, or similar performing artists primarily at live events in venues or at festivals."

How Will Shuttered Venue Grants Be Disbursed?

Grants will initially be disbursed according to a three-tier priority system. Grants will first be available to applicants who experienced at least a 90% reduction in revenue, next to those who experienced a 70% reduction in revenue, and third to all other entities, with at least $3 billion of funds to be held back for the last tier. Supplemental grants may be available in spring of 2021 for those with Q1 2021 revenue of 30% or less of such applicant's total revenue for Q1 2019.

How Much Are Shuttered Venue Grants?

Eligible entities can apply for funds equal to 45% of 2019 gross revenue, or for operators who weren't in operation for all of 2019, six times average monthly gross revenue for each full month the business was in operation. There is a cap of $10,000,000 on grants to any one person or entity (whether in the first round or a supplemental grant).

What Are My Obligations as a Grant Recipient?

In addition to restrictions on use of funds, recipients of Section 324 grants are required to keep records for a three-year period following receipt of the grant, and four years with respect to employment records. The Small Business Administration is also required to develop an oversight and audit plan for review of Section 324 grants.

If you have questions regarding the Section 324 grants for shuttered venue operators, your eligibility, or obligations as a recipient of funds, our team would be happy to assist.

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