Our friends at Chorus Connection have created an excellent primer on the various forms of possible Federal aid currently available. We recommend you start here if you need an overview: https://blog.
This post summarizes a couple of key issues that some organizations are facing as they make time-sensitive decisions on which path to follow. The situation changes daily, so please check sources regularly for updates.
What we know:
A new round of PPP loans (which convert to grants if you meet the terms of the agreement) are available for second draw to those organizations that already received PPP. While there are some caveats, in general if you previously qualified, you likely qualify for a second round. Applications are open now, or in the coming days, depending on your individual bank. PPP is based on payroll levels, so if your organization did not have a significant payroll before COVID, this may not be a significant source of funding.
The new legislation passed just before the new year, which the media called “Save Our Stages” is now technically known as Shuttered Venue Operators Grants (SVO). It will be administered by the Small Business Administration and they are still in the process of writing the guidelines. Several sources say it may be a week to ten days before final eligibility and process rules are finalized (end of January), however updates may come piecemeal. SVO grants will be based on lost earned revenue and potentially could be significantly larger than PPP (45% of your 2019 gross revenue) – if you qualify.
We also clearly know that the SBA will only allow your organization to apply for one or the other: PPP or SVO.
What we don’t know yet:
There are some significant questions within the unwritten or unclarified guidelines of the SVO grants. There is some language in the initial legislation around artist compensation that, depending on how it is interpreted, could disqualify volunteer performance forces such as amateur choruses. There is also some lack of clarity regarding eligibility for organizations, such as most GALA choruses, that don’t run venues. Until these issues are resolved, there is no solid advice to share.
While there is clarity that you must choose between PPP or SVO, it is not definitively clear yet if merely submitting an application is the trigger of your choice or if it would be based on the acceptance date of a loan/grant. At the moment, most experts caution that the act of simply applying could limit your future options.
Decision points:
At this unclear moment, many arts organizations face a Hobson’s Choice: go for PPP fast or wait for clarity on SVO and its potential for a higher payout. SVO eligibility will roll out in stages and it could be several weeks before smaller organizations are cleared to apply.
The risk of waiting is the possibility that PPP may run out of funding by the time SVO becomes a known option. Conversely, the potential for a much larger SVO grant could outweigh the impact of PPP. If your organization had a very limited payroll, waiting to understand your options is probably a prudent choice. But, until there is clarity on SVO eligibility, your decision must be guided by your tolerance of risk.
About this post: This information is aggregated from a variety of sources and should not be considered as legal or financial advice. It was written in general terms and may not fit the many specifics of your organization’s finances and structure. Among authoritative sources to follow, consider:
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