Small entertainment businesses are fighting for Covid relief grants
Studio Theatre closed in March 2020, as many local community theaters do. The Studio Theatre did not reopen until a year later.
Little Rock’s Arkansas theater realized that the sales it made from hosting outdoor shows or streaming live events did not cover its debts. Amanda Kennedy, the theater’s treasurer, discovered a program called Shuttered Venue Operators Grant by Small Business Administration. This $16 billion fund was created to help sustain the live entertainment industry. Kennedy read the details and concluded that Studio Theatre was likely to be eligible for $135,000 worth of grants.
Kennedy, certified public accountant said that the program was “a godsend” she felt.
She said, “We have loans I don’t know how long it will take us to retire…without the grant money.” “It hurts to think of that burden placed upon this theater.”
Amanda Kennedy (center), is Treasurer for the Studio Theatre, Little Rock AR.
Jennifer Schlesinger | CNBC
Studio Theatre did not apply for assistance. Studio Theatre now joins a small group that claims they can access aid. Others are considering legal action because they received different responses from similar businesses. Some say the explanations about why they were denied grants were lacking, and that uneven distribution has left them at a competitive disadvantage within the industry. Live events supporters claim that the wider industry was not included in the grant program. Now the race to obtain a new aid package for the many millions of people who claimed they were kept out of the loop.
Kennedy recalled her experiences and said that she didn’t expect it to happen. “We practically had the funds expended in our minds — in our budgets — because it was pretty much a sure thing that it was coming.”
Kennedy had signed on to the portal last April to submit her theater application. As many others she could not get through because of glitches in the rollout. The portal itself closed down on its first day. The application was received weeks later after the portal relaunched.
Kennedy felt confident. Kennedy felt confident when she received an email in July asking her to verify the portal. She logged into her account and said that the theater denied her, but did not know why. Kennedy appealed and was sent an email by August. Again, Kennedy appealed the decision and received an email in August.
Her hope was that her denial would be mistaken.. Theater had a different problem applying for assistance through the Economic Injury Disaster Loan Program. The funding was delayed by a mistaken identity, which has since been fixed. This time, however, the problem was not solved.
Studio Theatre, Little Rock AR
Jennifer Schlesinger | CNBC
Since its inception this spring, many operators and venues have benefited from the SVOG program. Over 12,000 grants for initial or supplemental funding have been awarded, totaling $13.6 billion. SBA data shows that more than 4,500 applicants were rejected.
Matthew Mokwa, who is a partner in The Maher Law Firm, Winter Park, Florida, has been reviewing possible claims against the SBA. He said that a team of two firms from Missouri and Washington, D.C. has reviewed nearly 200 inquires. Mokwa stated that the team has officially reviewed over 100 cases. According to Mokwa, a large number of cases meet the SVOG statutory criteria. This suggests that there might be grounds to bring an action against the SBA. Mokwa indicated that there have been approximately 25 filed cases to this point, and his company represented six.
Mokwa claimed that clients and prospective clients were given “insufficient” explanations about the denials. Mokwa stated that most clients and potential clients have not had the opportunity to obtain additional information through the SBA.
One client, for example, called Mokwa multiple times per day over many days to request more information on a rejected application. However, he was not able to contact anyone. He said that many applicants who were rejected can identify between 5 and 10 closest rivals who have been granted funding, which creates an unfair playing field for those operators looking to come back.
Mokwa explained that while this was an unfortunate consequence of the program, it is not intentional. “The government inadvertently picked losers and winners within specific industries.” It’s truly heartbreaking.
SBA did not comment on the pending litigation.
Studio Theatre has been consulting an attorney in order to determine if there are grounds to sue. Kennedy stated that the Studio Theatre’s appeal was subject to a thorough review.
The email Amanda Kennedy received saying the Studio Theatre’s appeal was denied.
Source: Amanda Kennedy
CNBC obtained emails showing that Kennedy was informed by the SBA that Kennedy’s request for the Studio Theatre grant had been denied. This is because the Studio Theatre, as an independent nonprofit, doesn’t pay any performers. The eligibility rules for the SBA seem to allow nonprofits to avoid having to pay their performers.
The organization states that volunteers are allowed to participate in production castings, provided the non-profit live performing arts organisation’s events are managed and produced mainly by employees. SBA said in its list of frequently asked questions about the program.
According to program data from both these groups and the SBA, grant funding was made for neighbouring community theaters such as the Argenta Community Theater (North Little Rock) and Royal Players (Benton), Arkansas. Nearly both theaters have been closed. Kennedy stated that the Studio Theatre was identical in all material aspects to Kennedy’s, even the non-paying performers.
Kennedy explained that it had been almost one year of financial hardship and emotional distress. He was told, “Here’s what can help you. Here’s a line for you.” That hope was denied repeatedly and then it was suspended.
Mike Savas, who had also been denied a grant and saw the rejection as a result of appeal, is now in the exact same situation as Kennedy. Savas is the owner of Superfan Live in Clearwater Florida, which promotes concerts and other events. Savas is an event promoter who sells VIP experiences. He has also worked recently on tour with Genesis and Big Apple Circus.
Mike Savas owns SuperFan Live. This is a business that promotes concert and event promotion.
Savas requested more than half of a million dollars and claimed that his company was close to going bankrupt. Savas claimed his competitors and friends who own similar businesses had been approved. He felt the reasons for his refusal were not clear and is now considering suing. But, he’s concerned about how much more debt he might take on.
“It has been messy and inconsistent. … He said that even if everyone was not approved for the same category, it is okay. It is not possible for one entity to be approved while another does not get approval in exactly the same business. It doesn’t make any sense.
An individual familiar with federal grant procedures, but not authorized to talk to the media, stated that grant applications are evaluated by individuals following a set of criteria. However, different reviewers might use differing thresholds or data interpretations during the application screening, financial or programmatic review. These factors could have an impact on the grant-awarding process, which could result in misinformed denials.
SBA did not comment on details of screening. However, it stated that they were aware of the screening process. He has shown creativity and dedication in providing funding opportunities to applicants.
More than 5,000 people were invited by the agency to appeal SVOG denial decisions. About 3,000 companies accepted that invitation, Diedra Henry Spires (a senior advisor with SBA’s Covid program) stated in a statement. According to her, the SBA offered to reconsider funding award amounts for around 2000 grant recipients. About 800 grantees were accepted.
The SBA did not specify the number of applicants who had received a decision in advance or those that were given additional funding.
Isabel Guzman (SBA Administrator) stated in an interview that appeals were made and reviewed to assure applicants had “their fair chance” to access funding and ensure applications were properly considered. Guzman did not comment on specific applications. She stated that although applicants may look similar to each other, the eligibility criteria are complicated. In the event that applicants are denied for any reason, Guzman stated that they would provide more details to prove their eligibility.
Isabel Guzman, Small Business Administration Administrator talks about Shuttered Venue Operator Grants at Blue Note Jazz Club.
Jennifer Schlesinger | CNBC
One possibility is a museum. Guzman explained that the one with fixed seating has to be there. The other does not. Guzman said that it could be an auditorium with removable seats. It’s not obvious to the general public, but that is a subtle nuance. It might be a factor in their eligibility based on their organizational structure and ownership. The individual applications might contain specific information that we can’t make public.
Advocates for broader assistance beyond the SVOG program remain hopeful that Congress will act.
In April 2020, the Live Events Coalition was created. coronavirus pandemicIt was established in 2001 and represents approximately 1,000,000 small businesses with a total economic impact of $872 billion. The group said 92% of its small business members — who represent trade shows, corporate events, weddings, local county fairs and more — did not qualify for relief under the program or the Restaurant Revitalization Fund.
While SVOG assisted in shuttering venues, Wendy Porter (Vice Chair of Government Affairs) said that it was clear that the program didn’t go far enough to support the people behind the scenes who make events possible.
Wendy Porter is an event organizer and vice chair for Government Affairs of the Live Events Coalition.
Porter who runs an event business, said “You are only saving the venues.” “You’re missing the rest of our industry, which is all of the service companies — the planners, the lighting and AV people. That language was missing the entire industry that helps make an event come alive. Although they wanted to save venues, the truth is that if you don’t save us all, you will have an empty room.”
Although the group reached out to lawmakers in an effort to get more support, it became clear that a bigger aid package would be harder to pass. According to the coalition, there is active legislation in the House as well as the Senate that will provide a helpline for entrepreneurs who work behind-the scenes. Porter claimed that certain members of the coalition have experienced losses in their businesses during these 15 months.
SBA programs, such as EIDL and the Paycheck Protection Program, provided an easier way out for the events industry. A fall poll by the coalition found that nearly half of those surveyed said they had cancelled 60% to 100% of their fall or winter bookings because of the delta variant. Omicron has also caused similar problems, with Broadway performances being cancelled, travel disrupted, and consumer confidence suffering yet another blow.
It’s hard for me to see my coworkers go through what they are going through. This is people’s livelihoods they have worked for many decades. Porter added that nobody is paying attention.
Savas continues to travel, looking for creative ways of staying afloat in his venture. Although the grants process is burdened with uncertainty and debt, Savas believes he’ll be able continue to tour and offer fan experiences.
“It was almost like being on the most dangerous roller coaster in existence. There were ups. There were also downs. He stated that the industry has seen 360 spins. It’s difficult to know whether the industry is returning, or if shows will be produced. We don’t know if we will be able pay our bills or if we will be denied approval. And it’s just been terrifying — and exciting — and disappointing. There were many cheers and tears along the journey.
He stated, “I simply want to get off of this ride, get mine money and return to work.”
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