Relief after shock: Arkansas theater says its denied Covid relief grant was overturned

• The Shuttered Venue Operators Grant Program's denial for aid for a small nonprofit theater was overturned, as featured in a CNBC investigation in early January.
• The $16 billion fund was established to support the live entertainment and arts sectors during the ongoing coronavirus pandemic.
• Although the program has assisted numerous individuals, it has also sparked protests from companies that feel they were entitled to assistance but were mistakenly rejected.

The Shuttered Venue Operators Grant Program's denial of aid for the Studio Theatre in Little Rock, Arkansas, was overturned by the Small Business Administration after months of limbo and mounting debts.

The $16 billion SVOG program, intended to support the live entertainment and arts industry during pandemic-related losses, has been met with controversy from businesses who feel they were unfairly denied aid despite eligibility.

The Studio Theatre was featured in a CNBC investigation in early January, which revealed that the theater, which had shuttered in March 2020 due to the pandemic and did not fully reopen for a year, was facing debts accrued for rent, insurance and more. The theater said it was initially denied a grant by the SBA in July 2021 because it does not pay its performers. However, as a nonprofit, according to the agency’s own guidelines, that shouldn’t have made the theater ineligible — a point brought to light by CNBC’s reporting. During a subsequent review, the Studio Theatre’s initial denial was upheld in August 2021.

The theater was informed via email on Feb. 4 to submit an updated budget to the SBA and was notified through the SBA's SVOG portal that its appeal was approved. Treasurer Amanda Kennedy was surprised by the news. Now, the theater is waiting for funding, having projected to receive approximately $135,000 in grants, with an initial and supplemental grant expected.

"After a year of this tumultuous journey, I was completely overwhelmed. The dam broke. But then came the sheer joy of realizing that all of my hard work and tears had finally paid off." - Kennedy

Kennedy stated that the theater had been contemplating taking legal action before this occurrence.

Over two dozen lawsuits have been filed against the agency by businesses that believe they were incorrectly denied aid under SVOG. While grant applications are reviewed by individuals adhering to standardized criteria, individual application reviewers may use various thresholds or differing data interpretations throughout application screening, programmatic or financial review processes. Each could impact the grant awarding phase that, in turn, could lead to mistaken denials. The SBA’s policy is not to comment on individual applications or pending lawsuits.

Over $13.6 billion in grants has been funded, with more than 12,000 initial and supplemental grants, but over 4,500 applicants were rejected, according to SBA data from December 2021.

In December, the agency informed CNBC that it had invited over 5,000 applicants to challenge SVOG decline decisions, like Kennedy's, and about 3,000 businesses accepted. Additionally, the SBA invited approximately 2,000 grant recipients to have their funding awards reconsidered, and around 800 grantees have accepted this offer. However, the agency did not disclose how many applicants had a prior decision upheld or how many were awarded additional funding.