Initially published in The Law Ally of Broadway |
Late last month congressional leaders finally agreed to offer cultural institutions, including music venues and movie and stage theaters, a coronavirus relief package of $15 billion for “Save Our Stages”, as part of the larger $900 billion relief package, which includes additional categorical relief, such as the Paycheck Protection Program, and unemployment benefits and direct assistance to individuals. The Save Our Stages relief is intended to try to save and assist these businesses that are drowning due to COVID-19 crisis. While many cultural and entertainment institutions are overjoyed by this new development, various non-profit organizations are concerned that organizations that lost a large percentage of their revenue will be given priority, due to the way the bill was structured.
Save Our Stages
The legislation paves way for cultural and entertainment entities that were fully operational on February 29, 2020 and have lost at least 25% of their revenue in 2020 in comparison to 2019 to apply for grants from the Small Business Administration for six months of support in paying employees, utilities, rent, mortgages, independent contractors and maintenance. In general, the support will be capped at $10 million each, and the grants provided will be calculated at 45% of each organization’s 2019 gross earned revenue. Managers and talent agents are also eligible to apply for grants, but publicly traded companies are not allowed to do so.
The relief package also has various other requirements for specific types of cultural or entertainment entities as listed below:
- Has a defined audience and performance space, mixing equipment, PA system and lighting rig;
- Marketed ticketed events/performances (e.g., social media, print, websites, email); and
- Includes two of the following roles: sound engineer, booker, promoter, stage manager, security personnel, box office manager
- Has at least one auditorium with a movie screen and fixed seating, a projection booth and a paid ticket charge; and
- Marketed ticketed movies (e.g., social media, print, websites, email)
- Serves primarily as a museum; and
- Has indoor exhibitions space and at least one auditorium, theater or performance or lecture hall with fixed audience seating and regular programming
While a start date of the grants has not been set yet, the first two-week period will be allocated to those organizations that have lost more than 90% of their revenue between April and December 2020 as compared to April to December 2019. The following two-week period will be allocated to those organizations that have lost more than 70% of their revenue between April and December 2020 as compared to April to December 2019. After the initial four weeks, $3 billion are set aside for all other eligible organizations.
Paycheck Protection Program (PPP)
An additional $284 billion will be allocated to non-profits and small businesses under the PPP, including to those in the arts and entertainment sectors. Below are the list of requirements for this next PPP round:
Applicants must have:
- 25% revenue loss in Q1, Q2, and Q3 of 2020 as compared to 2019
- (Others loans and PPP do not count towards these totals);
- Fewer than 300 employees per location;
- Used or will have used the full amount of any PPP loan already received; and
- No eligibility for a grant from the “Save Our Stages” relief fund
This second round of PPP payments will have some additional changes as well. While most industries are only eligible for a loan of 2.5 times of the annual payroll, the “Accommodation and Food Services sectors’” loan amounts will be calculated at 3.5 times of the annual payroll. However, the maximum loan amount is $2 million. Furthermore, loan forgiveness will now be possible for expenses including adaption to COVID-19, software and property damage, and tax deductions will be available for expenses covered by forgiven loans. For loans under $150,000, a simplified process will be included.
Unemployment Benefits and Direct Assistance
Unemployment benefits will be extended through March 14, 2021 which includes an additional $300 dollars a week for eligible individuals, including many unemployed theater professionals. Additionally, gig workers are able to claim 50 weeks of unemployment instead of the previous 39 weeks. Direct payments will also be available to adults and children up to $600 each.
- Ethan Krasnoo, Partner, RPJ LAW
Compliments of Reavis Page Jump – a member of the EACCNY.