By Doug K. Nickerson, CPA, CCA, Partner
The Shuttered Venue Operators Grant
The Shuttered Venue Operators Grant (SVOG) Program was created by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260, which was signed into law in late December 2020. The original bill appropriated $15 billion with an additional $1.25 billion appropriation after the American Rescue Plan Act, P.L. 117-2 became law March 11, 2021. The SVOG Program is administered by the U.S. Small Business Administration’s (SBA) Office of Disaster Assistance.
Recipients who received funding under the program in the Initial Phase have one year from the date the award was disbursed by the SBA to use the funds for eligible costs. If a recipient received funding in the Supplemental Phase, they have 18 months from the date of the Initial Phase disbursement to expend all grants funds received (both Initial and Supplemental Phase awards).
Shutter Venue Operators Grant Use of Funds:
SVOG funds may be used for the following eligible costs incurred between March 1, 2020, and December 31, 2021, or June 30, 2022, if the recipient received Supplemental Phase funding.
- Payroll costs
- Rent payments
- Utilities payments
- Scheduled mortgage payments (not including prepayment or principal)
- Scheduled debt payments (not including prepayment of principal on any indebtedness incurred in the ordinary course of business prior to February 15, 2020),
- Worker protection expenditures
- Payment to independent contractors (not to exceed $100,000 in annual compensation for an individual employee of an independent contractor)
- Other ordinary and necessary business expenses, including maintenance costs
- Administrative costs (including fees and licensing)
- State and local taxes and fees
- Operating leases in effect as of February 15, 2020
- Insurance payments
- Advertising, production transportation, and capital expenditures related to producing a theatrical or live performing arts production. (May not be primary use of funds)
SVOG funds may not be used for:
- Buy real estate
- Make payments on loans originated after February 15, 2020
- Make investments or loans
- Make contributions or other payments to, or on behalf of, political parties, political committees, or candidates for election
- Pay for any other use prohibited by the SBA
The SBA’s FAQ Regarding Shuttered Venue Operators Grant, dated October 20, 2021, provides the latest answers to common questions regarding the use of funds. In addition, care should be taken to ensure that you are not double dipping on costs claimed toward another federal cost-reimbursement grant or contract or forgiveness of a Payroll Protection Program (PPP) loan and your SVOG Program costs.
Shuttered Venue Operators Grant Audit Requirements:
As a Federal grant program, all funds awarded under the SVOG Program (CFDA# 59.075) will count toward the audit requirement to comply with the Single Audit Act. If an entity expends $750,000 or more in Federal grant funding (across all sources, including SVOG) in any single fiscal year, the entity will be required to complete an audit under the Single Audit Act.
If you are a for-profit entity, you can complete one of the following to meet the auditing requirement for the SVOG Program:
- Single or program specific audit consistent with Uniform Guidance Subpart F (2 CFR 200. 500 – 521); OR
- a financial related audit of the award in accordance with Government Auditing Standards.
There were numerous federal programs that have been established as a result of the COVID-19 pandemic, e.g. Paycheck Protection Program, Employee Retention Credit Program, EIDL Advances, and Disaster Assistance Loans to name a few. Therefore, if you are a recipient of or participated in other COVID-19 federal programs, it is important to understand its compliance and reporting requirements. We should note that if you received awards from multiple Federal grant programs in addition to the SVOG Program, then the options above may be limited, and a Single Audit might be required.
Shuttered Venue Operators Grant Administrative Items:
Recipients are required to maintain employment records for 4 year and to maintain all other records for 3 years documenting their compliance with and eligibility for the SVOG Program.
Recipients are required to initiate your SVOG closeout process no later than 120 days after the end of your Budget Period (as noted by the “Through” date on Form 1222, Box 5). The SBA has implemented a multi-step grant award closeout process that is completed through the SVOG portal.
Failure to comply with the SVOG Program compliance requirements, including but not limited to the Use of Funds or Audit Requirements above, can result in corrective actions from the SBA to include return of funds received and/or disciplinary actions, such as additional monetary penalties.
Our team of experienced professionals can help you understand the compliance requirements and assist you with the audit of your SVOG Program funds and any other COVID-related Federal program grant awards your company has received.
Download our free Shuttered Venue Operators Grant Program Expense Tracker here to assist in accumulating and documented eligible and allowable costs to assist in the audit and closeout processes. View our Checklist for Eligible and Allowable Costs Accumulation and Documentation.
About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.