The American Rescue Plan Act updates the Shuttered Venue Operator Grant program with additional funding and PPP2 interplay
In early January 2021, we wrote a detailed article on the eligibility, requirements and other information regarding the Shuttered Venue Operator Grants (SVOG) program, which was a new program created by the Consolidated Appropriations Act of 2021.
The American Rescue Plan Act of 2021 (ARPA) signed into law on March 11, 2021, updates the SVOG program by allocating an additional $1.25 billion of funding and allowing eligible organizations to receive both a Paycheck Protection Program (PPP) second draw loan and a SVOG grant. However, note that the SVOG grant will be reduced by the amount of the PPP2 loan received.
Prior to the ARPA, an eligible organization applying for a PPP2 loan was ineligible for a SVOG grant. Many eligible organizations were debating if they should apply for PPP2 funding, which was set to expire on March 31, 2021, or the SVOG grant, which had yet to even open the application portal.
The flexibility of applying for both may bring a sense of relief, but organizations planning on applying for funding under both programs should consider the following:
- Consider your organization’s ability to receive PPP loan forgiveness. The SVOG grant is reduced by the PPP2 loan, and any amounts that are not forgiven still result in a reduction of the SVOG grant.
- The PPP2 loan requires maintaining a certain level of full-time employee (FTE) headcount equivalent to certain historical periods, or else the organization risks a reduction in the forgiveness of the loan. Organizations should consider whether they can re-hire employees to these historical levels or risk reductions in loan forgiveness.
- Expenses paid for or reimbursed by the PPP2 loan cannot be paid for or reimbursed by the SVOG. You cannot apply the same expenses to the two different SBA programs, aka “double dip.” You should make sure you understand the allowable use of funds and time periods for each program to ensure the organization won’t have to repay the PPP2 loan or return the SVOG funds.
Currently, the SBA has not released the application for the SVOG program. However, the SBA has recently released a preliminary application checklist and additional guidance on its website through a set of FAQs. The preliminary application checklist has been made available to organizations to assist with gathering and preparing the necessary SVOG application materials in advance of the application opening.
At this point, organizations should determine the best funding scenario and continue to prepare for the long awaited SVOG application.
Wipfli can assist your organization
If you need assistance navigating this section of the ARPA or any other sections, contact Wipfli. Our nonprofit specialists have been reviewing the Act's provisions to fully understand its impact to nonprofit organizations like yours.
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