The American Rescue Plan Act provided for sweeping funding across the U.S. to address the pandemic’s impact on the economy. It included new stimulus checks, grants and relief for restaurants, and critical family child care and unemployment support. But it also created revised guidance for Paycheck Protection Program (PPP) handling among shuttered venues.

In updated guidance on Thursday, the Small Business Administration (SBA) said that the American Rescue Plan Act altered the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act that created the Shuttered Venues Operators Grant (SVOG). Specifically, the change means SVOGs, which include live venue operators, theatrical producers, museums, zoos, and other entertainment parks, cannot double dip on PPP loans and the SVOG.

Under the changes reflected in the SBA guidance, shuttered venues may not receive PPP loans if they’ve already received a Shuttered Venue Operators Grant. Those that apply for an SVOG now will see the amount they’re allowed to receive reduced by the total amount of their first- and second-draw PPP loans.

However, there’s a catch. The PPP loan subtraction applies only to PPP loans received after December 27, 2020. Any loans received prior to that date do not need to be subtracted from the SVOG.

It’s an important but potentially beneficial consideration for affected companies. Although the updated guidance may reduce the SVOG for some companies, for those that received aid last year but haven’t taken a second-draw PPP loan this year, they can take full advantage of SVOG’s value.

And what a value it is.

The American Rescue Plan Act allows for shuttered venues to receive a collective $16 billion to eligible applicants. Each company may apply for relief up to 45% of their gross revenues, up to a maximum of $10 million.

Since the SVOG is a grant, and if you qualify, the total amount of the disbursement is tax-free.

The SBA will begin taking SVOG grant applications in early April.

As always, know the team here at Perlson is always keeping a watchful eye on the changing tax landscape, and please contact your Perlson LLP professional at 516-541-0022 if you have any questions about SVOG, PPP, or how it may affect you.