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.

For eligible entities in operation as of January 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.

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.

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 February 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 February 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

Per the American Rescue Plan Act, any entity that receives a PPP loan on or after December 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 December 27, 2020, the combined amount will be deducted from the SVOG.

For example, a jazz club received a PPP loan for $10,000 on February 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 December 27, 2020, however, won’t have the PPP loan amount deducted from any subsequent SVOG.

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 2 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

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.

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.

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.