Shuttered Venue Operators Grant program closes for repairs on its opening day

The U.S. Small Business Administration (SBA) opened its new application portal for the $16.25 billion Shuttered Venue Operators Grant (SVOG) program Thursday but shortly afterward shut it down for repairs due to “technical difficulties” that prevented the platform from accepting applications.

The platform built for the program ran into technical difficulties almost immediately, with venue owners and other eligible businesses saying on social media that they could not upload supporting documents for their applications. The SBA acknowledged the technical difficulties in a tweet Thursday afternoon and said it was working to resolve the issues as quickly as possible.

Later in the afternoon, the SBA posted on the program’s webpage that it was temporarily shutting down the portal while it works with the platform’s vendors to solve the problems. The SBA said it would share advance notice of the time and date before the reopening so that all applicants can be prepared and have equitable access to the program, which will award grants on a first-come, first-serve basis within different areas of priority.

Payments not coming immediately

While the SBA opened the SVOG application window Thursday, it made clear in a news release issued late Wednesday night that the grants won’t start going out until later this month.

“The SBA is accepting SVOG applications on a first-in, first-out basis and allocating applicants to respective priority periods as it receives applications,” the release said. “The first 14 days of SVOG awards, which are expected to begin in late April, will be dedicated to entities that suffered a 90% or greater revenue loss between April and December 2020 due to the COVID-19 pandemic. The second 14 days (days 15–28) will include entities that suffered a 70% or greater revenue loss between April and December 2020. Following those periods, SVOG awards will include entities that suffered a 25% or greater revenue loss between one quarter of 2019 and the corresponding quarter of 2020.”

‘Serious concerns’ about controls

The technology snafu was the second significant bump in two days to hit the program. In a report issued less than 24 hours before the SVOG program was to open at noon ET Thursday, the Office of Inspector General (OIG) for the SBA expressed “serious concerns” with the control environment and tracking of performance results with the SVOG program, which is designed to provide eligible applicants with grants equal to 45% of their gross earned revenue, up to a maximum of $10 million.

Specifically, the report criticizes the audit plan established by the SBA’s Office of Disaster Assistance (ODA).

The ODA based its audit plan for SVOG on the risk levels shown in the table above, the OIG’s report said. The ODA plan mandates audits of all $10 million grants and also requires recipients of grants with multiple payments to submit documentation showing how they spent the funds prior to receiving the next installment.

The ODA’s plan allows for a total of no more than 10 audits across all of the low-risk loans, the inspector general’s report said. This limitation is problematic because program officials estimate that the majority of SVOG grants will be characterized as low-risk, meaning that most grants will “be disbursed in sweeping lump sum payments with minimal requirements and expectations for post-award accountability,” the report said.   

Noting that the ODA estimates the SBA will receive 15,000 applications and that the average SVOG size will be $1 million, the inspector general said that the low level of auditing and spending reviews for low-risk grants means that “the bulk of grant funds will not be subject to a reasonable degree of scrutiny.”

Asked via email about the inspector general’s report, SBA spokesperson Andrea N. Roebker responded with the following statement:

“Re: the OIG report, the Small Business Administration submitted a thorough and rigorous oversight and audit plan for the Shuttered Venue Operators Grant program. The SBA is working hard to support our nation’s entrepreneurs and small businesses, and we are committed to continuing assessments and making modifications where appropriate. Consistent with President Biden’s statements on the importance of preventing waste, fraud, and abuse for the economic relief programs, we will continue to work with the IG’s office on this and other SBA programs that are made available to the American people.”

The SVOG program was created when the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260, was signed into law in late December. The Economic Aid Act appropriated $15 billion to the program.

The American Rescue Plan Act, P.L. 117-2, which became law March 11, appropriated an additional $1.25 billion to the SVOG, bringing the program’s funding to a total of $16.25 billion. More than $16 billion of the funding is set aside for grants, with at least $2 billion reserved for eligible SVOG applicants with no more than 50 employees.  

Entities eligible to apply for an SVOG include operators of live venues, live performing arts organizations, museums, and movie theaters, as well as live venue promoters, theatrical producers, and talent representatives.

The American Rescue Plan Act amended the SVOG program so entities that apply for a Paycheck Protection Program (PPP) loan after Dec. 27, 2020, can also apply for an SVOG, with the eligible entity’s SVOG to be reduced by the PPP loan amount. An interim final rule codified those changes with additional details.

For more information on the SVOG, the following resources are available from the SBA:

• An archived recording of a national informational webinar about the application process.
• FAQs, additional video tutorials, an application checklist, and eligibility requirements — all available on the SBA’s SVOG webpage.

AICPA experts discuss the latest on the PPP and other small business aid programs during a virtual town hall held every other week. The webcasts, which provide CPE credit, are free to AICPA members and $39.99 for nonmembers. Go to the AICPA Town Hall Series webpage for more information and to register. Recordings of Town Hall events are available to view for free on AICPA TV.

The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

Accounting firms can prepare and process applications for the PPP on the CPA Business Funding Portal, created by the AICPA, CPA.com, and fintech partner Biz2Credit.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.