How long will SVOG recipients have to use their grant funds?

Recipients who receive a SVOG in the initial phase will have one year from the date their awards are disbursed by the SBA to use those grant funds. If an eligible entity receives a supplemental SVOG, they will have 18 months from the date the initial award was disbursed by the SBA to expend the combined initial and supplemental grant funds. At the end of the applicable deadline, SVOG grantees must return all unexpended SVOG funds to the SBA.

How are SVOG funds allowed to be spent?

Funds may be used for the following expenses: Payroll costs Rent and utility payments Scheduled mortgage and other debt payments — not including prepayment of principal on any indebtedness incurred in the ordinary course of business prior to Feb. 15, 2020 Worker protection expenditures and insurance payments Payments to independent contractors that don’t exceed $100,000 in annual compensation for an individual employee of an independent contractor Other ordinary and necessary business expenses, including maintenance costs Administrative costs, including fees and licensing State and local taxes and fees Operating leases in effect as of Feb. 15, 2020 Advertising, production transportation, and capital expenditures related to producing a theatrical or live performing arts production — although these can’t be the primary use of funds

How does receiving a PPP loan affect an eligible entity’s SVOG award?

Per the American Rescue Plan Act, any entity that receives a PPP loan on or after Dec. 27, 2020 — whether first or second draw — will have the PPP loan amount deducted from the SVOG amount. If the entity received both first and second draw PPP loans after Dec. 27, 2020, the combined amount will be deducted from the SVOG. For example, a jazz club received a PPP loan for $10,000 on Feb. 1, 2021, and then applied for and received a SVOG. The SVOG, based on the amount of the club’s earned revenue loss, was for $100,000. The jazz club’s SVOG would be reduced by $10,000 to account for the PPP loan, leaving it to ultimately receive a $90,000 SVOG. Any PPP borrower that received a PPP loan before Dec. 27, 2020, however, won’t have the PPP loan amount deducted from any subsequent SVOG.

Will SVOG awards count toward the single audit act threshold?

Yes. As a federal grant program, all funds awarded under the SVOG program count towards the requirement for an SVOG recipient. This threshold is met if an entity receives $750,000 or more in federal grant funding during a single fiscal year. A not-for-profit entity, institute of higher education, Tribe, or state or local government is required to comply with the audit requirements of two CFR 200, Subpart F. If an entity is a for-profit recipient of SVOG funds and meets that $750,000 threshold, it’s required to complete one of the following: Single audit or program-specific audit consistent with Uniform Guidance Subpart F (2 CFR 200.500-521) An audit of an entity’s financial statements. The expectations for the audit requirement, including process, report types, and submission are detailed in the Post-application guidance for SVOG applicants. In addition to an organization’s responsibility to administer the SVOG in compliance with federal requirements, it holds a key role in the audit process. This entails the following: Identify all federal awards received and expended Prepare the schedule of expenditures of federal awards as well as financial statements, in the case of a single audit Prepare a schedule of SVOG expenditures in the case of a program-specific audit Ensure the organization adhering to all compliance requirements

How can recipients prepare for an audit after receiving funds?

First, an organization will want to engage an auditor to perform the audit at its accounting year-end. The auditor can guide the organization through the steps to prepare for the audit. Next, the organization can take stock of the controls it put in place to administer the SVOG award and ensure compliance with program requirements. At this time, it may also gather the documentation providing evidence of compliance.

Will the SBA consider audit costs an allowable expense?

Organizations covered by the Single Audit Act may pay a reasonably proportionate share of the costs of audits required by, and performed in accordance with, the Single Audit Act from its SVOG budget. However, audit expenses generally won’t be considered an allowable grant expense.

What are the consequences of noncompliance?

The consequences of missing single audit reporting deadlines or being noncompliant with programmatic requirements poses several potential risks and concerns for organizations, such as: Certain grant amounts being withheld, subject to potential take-back by the granting agency Suspension or termination of the program in its entirety Other legal actions Organizations that are habitually noncompliant may end up in the federal debarment database to prevent them from receiving future federal funding. It’s also worth noting that the results of a single audit must be submitted to the federal government in a public database. As such, any noncompliance matters noted in a single audit — including internal control deficiencies — are available and accessible to the general public.

Article

Nine key compliance considerations for the shuttered venue operators grant program

Dec. 7, 2021 · Updated May 12, 2022 · Authored by Ali Chalak, Matthew Dinsdale

Guidance on this topic is constantly evolving. Information is current as of the date of publication.

The Shuttered venue operators grant (SVOG) program was established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and amended by the American Rescue Plan Act. The program includes over $16 billion in grants to shuttered venues, administered by the Small Business Administration (SBA) Office of Disaster Assistance.

The SVOG program no longer accepts new applications as of Aug. 20, 2021.

If your organization applied before the deadline, gain insight into key questions and answers around SVOG compliance requirements below.

How should a recipient account for a SVOG under the SBA’s COVID-19 relief programs?

Under the terms of the SVOG program, recipients aren’t required to repay the funding as long as funds are:

Used for eligible purposes
Used by the dates specified for each respective program

Not-for-profit entities should account for government grants in accordance with the Contributions Received subsections of Financial Accounting Standards Board (FASB) Accounting Standards Codification® (ASC) 958-605, Not-for-Profit Entities — Revenue Recognition.

What’s the maximum amount of a SVOG?

For eligible entities in operation as of Jan. 1, 2019, the SVOG initial funding amount is equal to 45% of the gross earned revenue during 2019. The supplemental SVOG amount may be up to 50% of the initial SVOG amount.

The maximum total amount that an eligible organization may receive from the SVOG program is $10 million.

Ali Chalak

Principal

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The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.