It is SVOG WEBINAR DAY!!! I’ll be publishing a wrap-up of the webinar tomorrow but wanted to get this next post up today. I’m assuming you’ve already checked out Part 1 and Part 2 of this series but if not, it might be helpful! Today we’re going to look at how and when you can spend SVOG funds once you get them.
The list of items that qualify as eligible expenses is long and more inclusive than the Payroll Protection Program. Before we jump into that, let’s talk about timing.
- You will have one year from when you receive SVOG funds to spend them.
- However, you can only use the funds on expenses incurred between March 1, 2020 and December 31, 2021.
Yes, that is a big however. One example of how this can work is if you contract work to upgrade your HVAC system before December 31, 2021 but don’t get the bill until spring 2022. In general, I think it is more advisable to use the money to produce this summer/fall and to reimburse the company for expenses from the past year.
The first items on the eligible list look familiar to PPP recipients: payroll, rent, utilities, and mortgage payments. Please note that mortgage principal, not just interest, is an approved use of funds for SVOG…you just can’t prepay the principal. If you received a PPP (or two) you will have to make sure you are covering different expenses for each…the same goes for the Employee Retention Tax Credit (ERTC). I see a lot of Excel spreadsheets in our future (like that is new!). Let me know if you need help here.
Another change compared to PPP is the ability to cover professional fees for independent contractors; that’s going to be a big help for producing this summer/fall.
Yes, you can also use funds for capital expenses related to producing (new lights, maybe?) and marketing, but these can’t be the primary use of the funds.
The item that gives us the most flexibility is “Other ordinary and necessary business expenses, including maintenance costs.” According to the FAQs, this includes items like:
- Refunding tickets for cancelled performances (remember, this goes back to March 1, 2020).
- Depreciation (we’re talking 22 months worth!)
- Debts incurred before February 15, 2020 (other than mortgage, which is covered above)
- and, “an ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.” Yep, this opens the list of eligible expenses way up!
I have to say, though, my favorite guidance provided by the SBA was this morsel:
SVOG funds can only be used to pay the actual incurred expenses of a grant recipient, which means the employer cannot use these funds for costs that did not actually occur
And with that, I’ll leave you to the webinar!