In December, Congress adopted the $ 16 billion Shuttered Venue Operators Grant program to provide a financial lifeline to performance and event venues, event promoters, cinemas, museums and talent representatives who have been decimated by the Covid-19 pandemic. But entertainment business owners told The Intercept that the Small Business Administration, the agency responsible for administering the program, has flatly turned down many businesses that should qualify without any explanation.
Initially, the SVOG program was plagued by technical issues that delayed its ability to accept requests for months. As of June, two months after starting accepting applications, it had awarded just 31 grants. But now the money seems to be flowing: by September it had issued more than 12,000 grants. Instead, the problem right now is that many companies can no longer receive the funds.
As of September 27, the SBA had refused nearly 30% of SVOG requests. Compare that with the Paycheck Protection Program – the $ 953 billion fund to help businesses cover wages and other expenses during the pandemic – which approved 97% of claims in May. While companies can appeal the SBA’s decision, the agency doesn’t tell them why they were denied, so they have to guess based on complicated and inconsistent criteria.
And unlike the Restaurant Revitalization Fund, which dispersed all of its $ 28.6 billion funding in June, the SBA only granted $ 11 billion out of the total $ 16 billion pot as of September 27. , so there is still money that could be allocated to more companies.
The SBA has “created winners and losers in the same industry because of the arbitrariness of rewards,” said Andrew Preble, owner of New Orleans-based escape company Escape My Room. He was turned down, and yet he knows that an escape room a few blocks from his has received grant money.
The SBA has “created winners and losers in the same industry because of the arbitrariness of rewards.”
At least two lawsuits have been filed against the SBA for denials. Kaos Productions – which operates Spin Nightclub in San Diego, a live entertainment venue for live performances by musicians, DJs, bands and individual artists – was turned down on the initial request and appeal despite demonstration that she met the eligibility criteria for performing venues, including submitting a letter from the San Diego Police Department outlining her authorization to operate only as a concert hall and a letter from one of his direct local competitors approving his eligibility, according to his lawsuit. “Spin needs an SVOG award precisely for the reason Congress created the SVOG program: to help eligible live entertainment businesses like Spin recover from the major setbacks they have suffered as a result of the pandemic. “, says the trial.
Colors Worldwide Inc., which promotes live performances on stage by DJs and R&B hosts in Los Angeles, was also turned down on the initial request and appeal, despite the inclusion of a letter from its expert. -certified accountant confirming that his main business activity is the promotion of live venues, according to his separate trial. The SBA declined to comment on the pending litigation.
The SVOG program was created specifically to help venues that were closed due to public health needs during the pandemic, and eligibility is strictly limited to performance venues, cinemas, and museums with indoor spaces. Still, some SVOG winners include outdoor activities and spaces, such as a 5k margarita madness run in California, a cross monument on a hill in Illinois, and a golf tournament in Oregon, as well. than a strip club, despite the program eligibility excluding “live shows of a lascivious sexual nature”.
“The master statute of the SVOG program is complex and includes 83 eligibility criteria, which vary for each type of entity. The SBA determines eligibility based on these criteria, ”SBA spokeswoman Andrea Roebker said in an email.
“Because the SVOG program is emergency aid and the SBA wants to ensure that all eligible people actually receive funding, SVOG applicants have been given the opportunity to correct errors and / or provide additional information to the SBA through a technical remediation process, which the SBA has deployed over 9,000 times to support SVOG applicants, ”said Roebker.
She noted that the SBA has published an “eligibility matrix” for business owners to understand why they might have been refused and has held “several” office hours and briefings on the appeal process. . Any applicants who were turned down on their initial application can appeal the decision, she added, which she said is “rare for a federal grant program.”
She did not respond to a request regarding the number of denials that were overturned on appeal, saying, “At this point, the SBA has made very few final decisions on appeal.” On September 3, the SBA sent an email informing applicants who had previously had their appeals rejected that the agency would “perform a more comprehensive assessment” of all appeals, according to an email shared with The Intercept.
Business leaders denounce what they say is a lack of transparency on denials. The agency refuses to tell them why a particular request was denied, leaving homeowners feeling like they’re shooting in the dark when they appeal. “It’s just really hard to have a successful call if you don’t know why you were turned down in the first place,” said Preble, the escape room owner.
Preble believes the problem is that the SBA has found itself trying to influence what matters as art and entertainment. Preble knows its industry is new, but maintains that it is live entertainment, not that different from a play. He says it meets all the criteria for a performance hall, including the actors performing, the lighting and sound systems, and the employees who handle ticket sales, marketing and of security. By a stroke of luck, he says, he called his SBA office and contacted someone who was willing to read the notes on his application to explain why he was refused. “They said that even though we hired actors it was not considered a performance,” he said. “It’s such an arbitrary thing to just decide what’s and isn’t a performance.”
“It’s such an arbitrary thing to just decide what is and isn’t a performance.”
Preble’s business was booming before the start of 2020; almost every year since 2014 he had opened a new location or a new experience. But he has yet to make a profit during the pandemic. Not only does an escape room require people to be inside together, the vast majority of its stuff also comes from tourists, many of whom have stopped traveling to New Orleans. It reopened in the summer of 2020 but only served between 15 and 20% of regular customers. Business picked up earlier this summer, but fell when the Delta variant rose and Hurricane Ida hit the area. Meanwhile, costs have increased to keep rooms sanitized and to space out groups of clients. “We’ve been incredibly close to bankruptcy all this time,” he said.
Preble has eagerly followed the debate in Congress on whether and how to fund concert halls. When the SVOG program was adopted in December, “it was a huge relief,” he said. The money would have enabled him to repay the debt he incurred, including arrears of rent and other fixed expenses that he could not cover, and to continue his business.
“It looked like we were going to get some help and staying open would make sense,” he said. But had he known he wouldn’t get anything from the grant money, he might have decided to stay closed for the last few months and save his resources for when the world was back to normal. . Without SVOG money, he is not sure he will be able to repay all his loans or even continue to operate for very long.
Shamrock Productions, a family business that hosts consumer shows in Farmington, Minnesota, has also been “crushed by the pandemic,” Vice President Chris Navratil said. Every show has been canceled since February 2020, meaning the company has not made any income. “I haven’t slept since March 2020,” she said. Shamrock’s first pandemic show is slated for December, but Navratil isn’t sure if that will actually happen.
So she jumped at the chance to ask for SVOG money. She applied as an auditorium promoter because her company takes care of everything for her events, including the rental of facilities, the purchase of advertising and the organization of live shows, such as numbers. song. She spent two weeks preparing her application to be rejected with no idea why. She sent the request on August 5 and received the denial on August 12. She appealed on August 24 and still has not received anything. She tried to call the SBA to find out why she was turned down, but she refuses to answer his questions.
Navratil knows of other companies like his that received mixed messages when contacting their representatives in Congress – some said yes, companies like his are entitled to the money, while others said no . “In Washington, there was not even a set, who is this program for and who it is not for,” she said, with palpable rage. “It’s everywhere, there is no rhyme or reason.” Some companies like hers got the money, she said, while others were turned down like she did.
When I asked her what it would mean if her rejection wasn’t overturned, she paused for a long time and sighed. “It means we’re going to have a lot of sleepless nights,” she said.
“We have done our part, we have closed our doors, our business has suffered,” she added. “Quite frankly, the government has an obligation to help us survive.