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Music Venues’ Quest for Billions in Federal Aid Is Stalled by Glitch

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As the government prepared Thursday to apply for a $ 16 billion aid fund for music clubs, theaters, and other businesses for live events, thousands of desperate applicants waited eagerly to submit their papers right at 12:00 noon, than the system should be opened.

And then they waited. And waited. Almost four hours later, the system still didn’t work at all, causing the applicants to go into a state of anxiety.

“This is an absolute disaster,” tweeted Eric Sosa, the owner of C’mon Everybody, a Brooklyn club, at the agency. Frustrated applicants banded together on social media forums and Zoom calls to express their anger.

The Small Business Administration, which leads the initiative, the Shuttered Venue Operators Grant Program, attributed the problems to a “technical problem” they allegedly wanted to work on.

The meltdown reflected the problems the agency had over the past year applying for the paycheck protection program, which it is also overseeing. When that program opened, the agency’s overloaded systems were seized – and the same thing happened again weeks later when a new round of funding became available.

Applicants for the scholarship program were incredulous that the agency was not better prepared – especially as the funds are to be distributed based on availability. Those who get their applications early have the best chance of getting help before they run out of money.

“Venues compete against each other because we are all crazy about it,” Sosa said in an interview. “And that’s not how it should be. We are all a community. ”

For companies like Crowbar, a Tampa, Florida music club, getting a scholarship is a matter of survival. Tom DeGeorge, Crowbar’s principal owner, has raised more than $ 200,000 in personal loans to keep the business alive after it closed last year, including a loan that used the liquor license as collateral.

More than a year later, the club has reopened with some reduced capacity events, but the business is still in the red, DeGeorge said in an interview.

“We lost a year of gigs in the blink of an eye, which is close to $ 1 million in revenue,” said DeGeorge. “That’s why we need this scholarship so badly.”

The aid was approved by Congress late last year after months of lobbying by an ad hoc coalition of music venues and other groups warning of the loss of an entire sector of the arts industry.

For music venues in particular, the last year has been a problem with local club owners running crowdfunding campaigns, selling t-shirts, and worrying about creative ways to raise funds. For the holidays, for example, the Subterranean Club in Chicago agreed to put the names of patrons on its marquee for donations of $ 250 or more.

“It’s been the busiest year,” said Robert Gomez, the main owner of Subterranean, in an interview. “But it was all about, ‘Where do I get money from?'”

Even before the fiasco on Thursday, the opening of the closed program of events was characterized by complexity and confusion.

The Small Business Administration released a 58-page applicant guide late Wednesday night and then quickly took it offline. A revised version of the manual was published just minutes before the portal opened on Thursday. (An agency spokeswoman said the guide needs to be updated to reflect “some last-minute system changes.”)

And less than two hours before the agency began accepting applications, its inspector general warned of “serious concerns” about the program’s waste and fraud control. The Small Business Administration’s current audit schedule “exposes billions of dollars to possible misuse of funds,” the inspector general wrote in a report.

As of 2019, successful applicants will receive a grant equal to 45 percent of their gross sales of up to $ 10 million. Those who lost 90 percent of their sales (year-over-year) after the coronavirus pandemic outbreak have a 14-day priority window to receive the money, followed by another 14-day period for those who have 70 percent or have lost more. If there are still funds left over after that, they will go to applicants who had a revenue loss of 25 percent in at least one quarter of 2020. Large company venues such as Live Nation or AEG are not eligible.

The application process is extensive and contains detailed questions about the budget, staff and equipment of the venues.

“You want to make sure you don’t just put a piano in the corner of an Italian restaurant and label yourself a music venue,” said Blayne Tucker, an attorney for several music rooms in Texas.

Even with the scholarships, music venues can face many dry months before tours and live events return on a par with prepandemic levels.

The scholarship program also provides assistance to Broadway theaters, performing arts centers, and even zoos that face many of the same economic problems.

For example, the Pablo Center at Confluence in Eau Claire, Wisconsin raised about $ 1 million from donations and grants during the pandemic, but is still $ 1.2 million less than annual fixed operating costs, Jason Jon Anderson said . its managing director.

“If we reopen in October 2021 at the earliest, we will be closed longer than before,” he added. (The center opened in 2018 at a cost of $ 60 million.)

The thousands of small clubs that are on the national concert ticket have no access to large donors and, in many cases, have survived with smoke for months.

Stephen Chilton, owner of the 300-seat Rebel Lounge in Phoenix, said he took out “a few hundred thousand” loans to help keep the club afloat. In October it reopened with a pop-up cafe. The club hosts a few events, including quizzes and open mic shows.

“We’re losing a lot less than we lost when we were completely closed,” said Chilton, “but it doesn’t make up for the lost revenue from running events.”

The Rebel Lounge hopes a scholarship will help it survive until it can bring back a full range of concerts. What if his application is not accepted?

“There is no plan B,” said Chilton.

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Robert Dunfee