A highly criticized fund providing coronavirus relief to venues forced to close during lockdowns has rejected nearly a third of all applicants, according to documents provided by the Small Business Administration.
The Shuttered Venue Operators Grants (SVOG) was established by Congress in December 2020 to provide relief to the America’s small and independent entertainment venues which had been unable to operate during the pandemic. The SVOG program, which originally began as the bipartisan #SaveOurStages Act, set aside more than $16 billion in aid. Clubs, music venues and live performance spaces were eligible for grants amounting to 45% of their gross earned revenue expected over the course of 2020 based upon previous years’ receipts. The fund, it was suggested, was the largest individual dispersement for arts funding in the US since Franklin Roosevelt created the Works Progress Administration in 1935 as part of the New Deal.
Presided over by the Small Business Administration, SVOG was soon drowning in red tape. Approved on December 27, 2020, the SBA did not begin accepting applications for funding until April 8 due to creating a new website for the program from scratch. After 4 hours, the new website promptly crashed and stayed down for more than two weeks. By June, just 90 out of more than 14,000 applications had been approved.
The backlog was mostly eliminated by August, when SVOG was closed to new applications. As of December 20, the SBA received 17,644 applications and awarded more than $10.6 billion in grants during the initial phase of the process. The SBA is now issuing “supplemental” grants which have awarded an additional $3 billion to 8,538 successful applicants, for a total of $13.6 billion in grants.
$13.6 billion, you may have noticed, is less than $16.25 billion, the total amount that Congress authorized for the SVOG program. Most other business COVID recovery programs have spent all of their funds, but SVOG is presently sitting on $2.65 billion, nearly a sixth of the funds set aside for venues unspent as of December 20 — nearly a year after the funds were approved.
Even after submitting rent checks, floorplans, photographs of equipment, contracts with artists and receipts for marketing campaigns, the SBA still rejected the parent company of Spin nightclub in San Diego. Twice.
What makes that even stranger is that the SBA has rejected nearly 5,000 applicants — 30% of the total applicants. It would be one thing if the SBA were scrupulously auditing incomplete or even fraudulent applications, but numerous stories and lawsuits have emerged suggesting that eligible applicants have been denied funds without explanation.
The parent company of Spin, a nightclub in San Diego, was compelled to sue the SBA after both their application and their appeal were summarily denied, both without comment.
“Spin, a small, family-owned business and live entertainment venue for on-stage performances by local and international musicians, including DJs, bands and individual artists, demonstrated its eligibility for a SVOG award in its application to the SBA,” the lawsuit filed on September 1 alleged.
Spin’s application demonstrated their catastrophic losses during lockdowns. “Spin also submitted, among other things, its venue floorplans and equipment photographs, venue rent checks, sample contracts with performance artists and promoters, receipts for marketing campaigns, screenshots of and web links to online marketing materials, and records reflecting ticket sales and cover charges.” After denial, they submitted even more materials, including quarterly income statements for the last three years and a letter from the police and even a local competitor. The appeal was also denied, which effectively made the SBA’s decision final. So Spin filed suit.
The US District Court for Washington, DC demanded Spin and the SBA confer. On October 5, 2021, the SBA reversed its prior decisions and awarded Spin a grant of $644,547.11. A decision on supplemental funds for the venue is now pending.