URGENT UPDATE: The Small Business Administration (SBA) is actively pursuing the return of $1.5 billion in federal funds originally allocated to support the live entertainment industry during the pandemic. As of now, 1,080 grants remain open, raising serious questions about how these funds were utilized.
New reports confirm that the SBA was expected to close out the Shuttered Venue Operators Grant (SVOG) program by June 2023. Yet, the agency has faced significant delays, with many grantees failing to submit required audits or respond to inquiries regarding their funding. This lack of accountability may impact numerous businesses that relied on these grants.
The SVOG program was intended to be a lifeline for venues, theaters, and other entertainment businesses struggling during the COVID-19 pandemic. However, a 2024 investigation revealed that up to $200 million was reportedly misused, with some successful musicians allegedly spending grant money on luxury items, including high-end hotels and private jets.
In a shocking twist, Sen. Joni Ernst, who oversees the Senate’s small business committee, criticized the Biden administration for its inadequate recovery efforts. “The administration made almost no effort to recover more than $500 million in improper payments,” she stated. Ernst is advocating for legislation that would extend the statute of limitations for prosecuting fraud cases related to the SVOG.
The SBA is ramping up its efforts to reclaim these funds, sending out numerous letters to grantees demanding repayment. Meredith Lynsey Schade, a theatrical producer, acknowledged the program’s overall success but expressed concern over the aggressive nature of the clawbacks, stating, “These recoupment letters are not necessarily about fraud.”
With reports of widespread confusion among grantees, including venue owners and agents, many are unsure about the specific reasons for their clawback letters. Michael Strickland, a lighting company owner, revealed that he has been contacted by “hundreds” of individuals facing similar issues.
The SBA’s internal watchdog has indicated that the agency’s failure to address improper payments has heightened the risk of not recovering these funds. Authorities have identified $544 million in potentially improper payments that should be reclaimed from various recipients.
As the situation continues to unfold, the live entertainment industry is holding its breath, uncertain about the ultimate fate of these funds and the impact on their businesses. Stay tuned for further updates on this developing story.
