SBA Issues Eligibility and Application Guidelines for Tiered Site Grants | Pillsbury Winthrop Shaw Pittman LLP

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Below, we summarize the main aspects of the Eligibility Requirements Overview and Preliminary Application Checklist released by the SBA on March 5, 2021.

Eligibility conditions for all companies

The March 5 SBA guidelines state that to be eligible for a grant, an applicant must establish that they:

General requirements

  • Was fully operational on February 29, 2020.
  • Had gross income earned in any of the first, second, third or fourth quarters of 2020 that experienced a reduction of at least 25 percent in gross income earned from those activities in the corresponding quarter in 2019.

Ownership restrictions

  • Not publicly traded, or majority owned and controlled by a publicly traded entity.
  • Does not have, or is not majority owned and controlled by an entity having the following three characteristics:

– Owns or operates venues, relevant museums, cinemas or talent agencies or talent management companies in more than one country;

– Owns or operates venues, relevant museums, cinemas or talent agencies or talent management companies in more than ten states; and

– Employs more than 500 employees as of February 29, 2020, determined in full-time equivalent.

  • Not majority owned or controlled by an entity that received more than 10% of gross revenues from federal funding in 2019, excluding amounts received by that company under the Robert T. Stafford Disaster Relief Act and emergency assistance.

Prohibited activities

  • Does (i) present live performances of a lascivious sexual nature or (ii) do not derive, directly or indirectly, more than gross de minimis income through the sale of any products or services, or the presentation of any performance or exhibition, of a lascivious sexual nature.
  • As of December 27, 2020, has not received any loans under the SBA Paycheck Protection Program. (Please note that the American Rescue Plan Act of 2021, which is expected to be enacted on March 12, 2021, removes this restriction and instead provides that the amount of any grant received will be reduced by the value of any PPP loan received on or after the 27th. December 2020).

Additional requirements by type of business

The following other eligibility conditions apply in each business category specified below:

Performing arts operator or promoter, theater producer or live performing arts organization operator

Business needs

  • One of its main business activities is to operate or use venues for qualifying live events for which (i) a cover charge through the box office or entrance fee is applied, and (ii) performers or performers are remunerated under a sales, warranty (in writing or standard contract) or other mutually beneficial formal agreement.
  • Is:

Operational requirements

  • Has taken over or intends to take over the organization, promotion, production, management or hosting of future eligible live events.

Facility requirements

  • Has a defined performance and audience space.
  • Has mixing equipment, sound system and lighting installation.
  • Hires one or more people to fill at least two of the following roles: a sound engineer; a booker; a promoter; a manager; security personnel or a ticket manager.
  • Requires a paid ticket or cover charge to attend most performances, and performers are paid fairly (rather than performing for free or for tips, except for fundraisers or similar charity events).
  • If owned or operated by a non-profit entity that produces free events, qualifying live events are produced and managed primarily by paid employees, not volunteers.
  • Market the performances in print or electronic publications, on websites, by mass email or on social media.

Cinema operator

Business needs

  • One of its main business activities is to own and operate at least one public accommodation facility for the purpose of showing films for remuneration.

Operational requirements

  • Is open or intends to reopen for the primary purpose of public exhibition of motion pictures.

Facility requirements

  • Has at least one auditorium that includes a motionphoto screen and fixed audience
  • Has a booth or projection space containing at least one cinema projector.
  • Requires a paid ticket to attend the motion picture exhibition.
  • Market film exhibits through show listings in print or electronic publications, on websites, by mass mail or on social media.

Museum operator

Business needs

  • Manages a “relevant museum”, as defined by the Law on Economic Aid, which means “a public, tribal or private not-for-profit agency or institution permanently organized for primarily educational, cultural or aesthetic purposes , which employs professional staff, owns or uses tangible objects, takes care of tangible objects and regularly exhibits tangible objects to the public. This term includes museums that have tangible and digital collections and includes aquariums, arboretums, botanical gardens, art museums, children’s museums, general museums, historic homes and sites, history museums , nature centers, natural history and anthropology museums, planetariums, science and technology centers, specialized museums and zoos.

Operational requirements

  • Is open or intends to reopen.

Facility requirements

  • Has indoor exhibition spaces that are part of the core business activity and that have been subject to occupancy restrictions related to the pandemic.
  • Has at least one auditorium, theater, performance or conference hall with fixed seating and regular programming.

Talent representative

Business needs

  • No less than 70 percent of its operations are engaged in the representation or management of at least two artists and artists.

Operational requirements

  • Represents or manages artists and artists.

Facility requirements

Not applicable.

Preliminary application checklist

As required by the Law on Economic Aid, eligible grant recipients must provide specific documents to justify their eligibility and compliance with the requirements listed above. As of this writing, the SBA has not opened its online portal for applications. In the meantime, the SBA has provided the following preliminary list of supporting documents that will be required:

All applicants

Reference documents

  • Written statement of needs and insurance, which must include:

– A good faith attestation that the uncertainty of current economic conditions makes the grant necessary to support the ongoing operations of the eligible person or entity.

– If the entity is currently in operation, a statement that the entity will remain in operation after receipt of funds. If the entity is currently closed, the statement must include the intention to reopen with an estimated reopening date.

– Assurance that the entity was fully operational on February 29, 2020 and that the funds will only be used for the authorized purposes established by law.

  • Corporate documents (may include articles of incorporation, certificate of existence, certificate of organization, state LLC agreement, certificate of formation, articles of association, or partnership agreements).
  • Government issued photo ID – front and back.
  • List of employees with job titles and employee status (full-time or part-time), which must include:

– Full Name.

– Description of an employee: for example, full-time; part time; temporary from an employee agency, a rental company or through a union agreement; co-employee under an employer’s professional organization agreement; employee; included in payroll; not included in the payroll; owner; officer; shared with the affiliate; etc.

– Some people may require more than one designation in the description: for example, “Jane Smith – owner, employee, included in pay; Joe Smith – owner, not included in payroll, shared with affiliate. “

– Number of hours the employee works per month.

  • Letter of tax exemption status (required only for non-profit entities).

– It is also known as the “letter of determination” and must confirm that the applicant meets the IRS criteria to be a tax-exempt charity.

Financial documents

  • 2019 tax return.
  • 2020 income tax return, if filed.
  • Quarterly income statements 2019 and 2020.
  • Copy of the most recent audited financial statement (2019) or single audit, if applicable, or link to a website where the report can be found.
  • Agreement on Cognizant Agency’s indirect cost rates, if applicable.
  • Pay slips from 02/29/2020.

Standard Forms

Additional documents required by type of business

Performing arts operator or promoter, theater producer or live performing arts organization operator

  • Floor plan used for insurance or local fire inspections, which demonstrates the location of the performance space defined (and grounds plan if the outdoor space is used for the performance venue) .
  • Documents (for example, purchase receipts or insurance documents) to show that the place has audio mixing equipment, a sound system and lighting equipment.
  • Marketing materials listing the title of the event, the time of the show, and the prices or entry requirements, which may include print materials or social media posts.
  • Box office / ticket office report showing date, artist, ticket price and number of tickets sold.

– Provide the report for all performances for February 2020. If the venue was active but had no performances in February 2020, select a month between January 2019 and January 2020 and provide this report.

Cinema operator

  • Floor plan used for insurance purposes or local fire inspections, which identifies the projection booth.
  • Marketing materials listing movie titles and times, which may include print materials or social media posts.
  • Box office / ticket office report showing artist or event name, date, ticket price and number of tickets sold.

– Provide the report for all performances for February 2020. If the theater was active but had no performances in February 2020, select a month between January 2019 and January 2020 and provide this report.

Museum

  • Floor plan (and site plan if the outdoor space is used for the performance hall).
  • State or local COVID-19 occupancy restrictions demonstrating occupancy limits.

Talent representative

  • Examples of contractual / consultant agreements with talent represented and locations used, and proof of reservation.
  • List of all individuals or acts depicted and the locations for which they were engaged to perform in 2019 and 2020, including performances canceled due to COVID-19.

For a more detailed description of the documents listed above, please refer to pages 2-4 of the SBA Preliminary application checklist.

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