SBA’s SVOG Crackdown: Around 650 Music Venues Pursued Over Suspect COVID Rescue Funds

Photo Credit: Magnus Lunay

The Small Business Administration (SBA) recently sent a wave of Shuttered Venue Operators Grant (SVOG) rescission letters. A new update from the National Independent Venue Association (NIVA) suggests more than 91% of venues that received funds are in the clear.According to NIVA, the SBA has assured that 91.7% of SVOG grantees—those who completed paperwork and closed out their grants—are not at risk of clawbacks. The agency emphasized that only in cases where the SBA Inspector General uncovers evidence of fraud would closed-out grants be subject to further review.

“SBA has no current plans to pursue recoupment from any grantee who has closed out, which is 91.7% of SVOG grants,” NIVA told its members. “According to SBA, the only way that would change is if the SBA Inspector General were presented with any evidence of fraud committed by any SVOG grantees that have closed out.”

Roughly 645 grantees are still under the lens of scrutiny by the SBA. More than half of these have been non-responsive to SBA communications, while the remainder face issues ranging from incomplete or missing paperwork to eligibility questions, audit findings, or failure to meet post-award requirements.NIVA clarifies that incomplete paperwork is the most frequent cause of being identified for recoupment. Either the requested paperwork has not been submitted or the paperwork submitted did not have enough information. Other reasons venues may have received rescission letters include not being responsive to an audit or having an audit finding, failure to meet post-award requirements, failure to file expense reports, failure to respond to monitoring requests, or an entity has filed for bankruptcy but not closed out their SVOG grant.

The SVOG program was initially designed to support independent venues, theaters, museums, and promoters. But it also drew attention for grants awarded to major touring companies and artists including Chris Brown, Lil Wayne, and Marshmello. Reports surfaced of funds being used for luxury expenses, private flights, and bonuses. Despite the controversy, the SBA has closed its review of at least $155 million in grants awarded to high-profile entertainers and has no intention of pursuing clawbacks for these closed-out cases.

For the minority of small venues still facing rescission, immediate action is crucial. Recipients have 30 days to respond to the SBA, either by repaying the funds, setting up a repayment plan, or requesting reconsideration. Legal experts urge recipients to exercise their appeal rights to ensure all documentation is complete.