COVID Relief, Arts and Entertainment Venues Grant Program — GAO-23-105199, October 2022
Summary
A Government Accountability Office report to congressional committees, GAO-23-105199, dated October 2022, on the Shuttered Venue Operators Grant program of the Small Business Administration (SBA). It states that between April 2021 and July 2022 SBA awarded $14.6 billion in grants, and it cites 17,328 applications received as of December 31, 2021. A GAO survey found that most applicants viewed the program communications negatively, and the survey estimates that 85 percent of applicants found guidance changes challenging. GAO recommends that SBA develop a comprehensive strategy for communicating with applicants of future emergency assistance programs, and states that SBA partially agreed with the recommendations.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
About this report. GAO found that SBA approved about 73 percent of the 17,328 Shuttered Venue Operators Grant applications it received as of December 31, 2021, and that most applicants and recipients were small businesses with 50 or fewer employees. GAO's criticism, that SBA's post-award controls could be strengthened, including its fraud risk monitoring, is not an estimate of fraud in the program.
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- SBA materials
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- Covid Relief Sba Could Improve Communications And Fraud Monitoring For
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- Covid Relief Sba Could Improve Communications And Fraud Monitoring For
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“COVID Relief, Arts and Entertainment Venues Grant Program — GAO-23-105199, October 2022.”
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United States Government Accountability Office
Report to Congressional Committees
COVID RELIEF
October 2022
SBA Could Improve
Communications and
Fraud Risk Monitoring
for Its Arts and
Entertainment Venues
Grant Program
GAO-23-105199
October 2022
COVID RELIEF
SBA Could Improve Communications and Fraud Risk
Monitoring for Its Arts and Entertainment Venues
Highlights of GAO-23-105199, a report to
congressional committees
Grant Program
Why GAO Did This Study What GAO Found
Between April 2021 and July 2022, The Shuttered Venue Operators Grant program was created to financially assist
SBA awarded $14.6 billion in grants to businesses in the performing arts and entertainment industries hard hit by the
help arts and entertainment COVID-19 pandemic. The Small Business Administration (SBA) approved 73
businesses adversely affected by the percent of the 17,328 applications it received for the program as of December 31,
pandemic. Grantees can use the 2021. Smaller businesses (those with 50 or fewer employees) represented over
awards to pay for operating expenses 90 percent of award recipients. Of the six types of eligible businesses, movie
such as payroll, rent or mortgage, and theaters had the highest median award amount (see figure).
utilities.
The CARES Act includes a provision Shuttered Venue Operators Grant Recipients and Median Awards, by Eligible
for GAO to monitor funds provided for Business Type, as of December 31, 2021
the COVID-19 pandemic. Among its
objectives, this report examines
characteristics of grant applicants and
recipients as of December 31, 2021;
applicant views of SBA
communications; and steps SBA took
to identify ineligible and fraudulent
applications and manage fraud risks
and the extent to which these reflect
selected leading practices.
GAO reviewed documents from SBA
and analyzed program data as of Most applicants viewed SBA’s Shuttered Venue program communications
December 31, 2021 (the most recent negatively, according to a GAO survey. The agency changed program guidance
grant-level data available at the time of frequently and the survey estimates that 85 percent of applicants found these
GAO’s analysis). GAO surveyed a changes to be challenging. Customer service was hard to access and did not
generalizable sample of grant provide applicant-specific assistance, most survey respondents reported. SBA’s
applicants, and interviewed staff from existing plans for program communication during emergencies focus on regional
SBA and six business associations. loan programs serving all businesses, so they were not well-suited for the
GAO also tested program eligibility and Shuttered Venue program, which is a grant program that is national in scope but
fraud controls. industry-specific. A more comprehensive communications strategy would better
position SBA for future emergency assistance programs, particularly those that
What GAO Recommends may differ from its existing programs.
GAO recommends that SBA (1)
SBA controls for the application process (pre-award controls to verify identity and
develop a comprehensive strategy for
eligibility) reflected some leading practices for fraud risk management. For
communicating with applicants of
future emergency assistance
example, SBA designed controls to check applicant information against third-
programs, and (2) ensure that post- party databases. SBA periodically assessed risks to the program, including fraud
award monitoring procedures for its risks. The most recent assessment described eight fraud risks, including identity
Shuttered Venue program specifically theft. In July 2022, SBA provided GAO with draft procedures for monitoring
address risks the agency identified. suspected fraud among Shuttered Venue grant recipients. However, the draft
SBA partially agreed with the procedures do not specifically discuss all risks identified in SBA’s fraud-risk
recommendations. GAO continues to assessments. GAO’s fraud risk framework underscores the importance of
maintain that both recommendations focusing monitoring resources on identified risks. By ensuring that the program’s
are valid. monitoring efforts are appropriately targeted, SBA would be better positioned to
detect and respond to fraud.
View GAO-23-105199. For more information,
contact William B. Shear at (202) 512-8678 or
ShearW@gao.gov.
United States Government Accountability Office
October 2022
COVID RELIEF
SBA Could Improve Communications and Fraud Risk
Monitoring for Its Arts and Entertainment Venues
Highlights of GAO-23-105199, a report to
congressional committees
Grant Program
Why GAO Did This Study What GAO Found
Between April 2021 and July 2022, The Shuttered Venue Operators Grant program was created to financially assist
SBA awarded $14.6 billion in grants to businesses in the performing arts and entertainment industries hard hit by the
help arts and entertainment COVID-19 pandemic. The Small Business Administration (SBA) approved 73
businesses adversely affected by the percent of the 17,328 applications it received for the program as of December 31,
pandemic. Grantees can use the 2021. Smaller businesses (those with 50 or fewer employees) represented over
awards to pay for operating expenses 90 percent of award recipients. Of the six types of eligible businesses, movie
such as payroll, rent or mortgage, and theaters had the highest median award amount (see figure).
utilities.
The CARES Act includes a provision Shuttered Venue Operators Grant Recipients and Median Awards, by Eligible
for GAO to monitor funds provided for Business Type, as of December 31, 2021
the COVID-19 pandemic. Among its
objectives, this report examines
characteristics of grant applicants and
recipients as of December 31, 2021;
applicant views of SBA
communications; and steps SBA took
to identify ineligible and fraudulent
applications and manage fraud risks
and the extent to which these reflect
selected leading practices.
GAO reviewed documents from SBA
and analyzed program data as of Most applicants viewed SBA’s Shuttered Venue program communications
December 31, 2021 (the most recent negatively, according to a GAO survey. The agency changed program guidance
grant-level data available at the time of frequently and the survey estimates that 85 percent of applicants found these
GAO’s analysis). GAO surveyed a changes to be challenging. Customer service was hard to access and did not
generalizable sample of grant provide applicant-specific assistance, most survey respondents reported. SBA’s
applicants, and interviewed staff from existing plans for program communication during emergencies focus on regional
SBA and six business associations. loan programs serving all businesses, so they were not well-suited for the
GAO also tested program eligibility and Shuttered Venue program, which is a grant program that is national in scope but
fraud controls. industry-specific. A more comprehensive communications strategy would better
position SBA for future emergency assistance programs, particularly those that
What GAO Recommends may differ from its existing programs.
GAO recommends that SBA (1)
SBA controls for the application process (pre-award controls to verify identity and
develop a comprehensive strategy for
eligibility) reflected some leading practices for fraud risk management. For
communicating with applicants of
future emergency assistance
example, SBA designed controls to check applicant information against third-
programs, and (2) ensure that post- party databases. SBA periodically assessed risks to the program, including fraud
award monitoring procedures for its risks. The most recent assessment described eight fraud risks, including identity
Shuttered Venue program specifically theft. In July 2022, SBA provided GAO with draft procedures for monitoring
address risks the agency identified. suspected fraud among Shuttered Venue grant recipients. However, the draft
SBA partially agreed with the procedures do not specifically discuss all risks identified in SBA’s fraud-risk
recommendations. GAO continues to assessments. GAO’s fraud risk framework underscores the importance of
maintain that both recommendations focusing monitoring resources on identified risks. By ensuring that the program’s
are valid. monitoring efforts are appropriately targeted, SBA would be better positioned to
detect and respond to fraud.
View GAO-23-105199. For more information,
contact William B. Shear at (202) 512-8678 or
ShearW@gao.gov.
United States Government Accountability Office
Contents
Letter 1
Background 3
Most Applicants Viewed SBA’s Program Communications
Negatively 7
Most Applicants and Recipients Were Small Businesses with 50 or
Fewer Employees 18
SBA’s Pre-Award Controls Reflect Some Leading Practices and
Post-Award Controls Could Be Strengthened 25
SBA Plans to Measure SVOG Performance Outcomes 35
Conclusions 37
Recommendations for Executive Action 37
Agency Comments and Our Evaluation 38
Appendix I Objectives, Scope, and Methodology 43
Applicant Views on SVOG Communications and Application
Process 43
Characteristics of SVOG Applicants and Recipients 45
SBA’s Control Activities, Including for Fraud 47
SVOG Performance Measurement 49
Appendix II Application Processing Times for the Shuttered Venue Operators Grant
Program 51
Appendix III Key Changes to Pre-Award Controls for the Shuttered Venue Operators
Grant Program 53
Appendix IV Comments from the Small Business Administration 54
Appendix V GAO Contact and Staff Acknowledgements 58
Tables
Table 1: Examples of Eligibility and Funding Conditions for the
Shuttered Venue Operators Grant Program 4
Page i GAO-23-105199 Shuttered Venue Operators Grant
Table 2: Significant Changes to SBA’s FAQs for the Shuttered
Venue Operators Grant Program, March 22–April 23,
2021 7
Table 3: Applicant Views on Changing SVOG Program Guidance
(Estimated) 8
Table 4: Actual Level of Resources Needed to Apply for SVOG
Compared to Applicant Expectations (Estimated) 9
Table 5: Applicant Views on Gathering and Preparing Documents
for SVOG (Estimated) 10
Table 6: Applicant Views of Selected Information Sources on
SVOG Eligibility and Requirements (Estimated) 10
Table 7: Applicant Views of Small Business Administration (SBA)
Communication on the SVOG Application Portal
(Estimated) 14
Table 8: Applicant Views of the Usefulness of SVOG Notifications
on Application Status (Estimated) 14
Table 9: Applicant Views of the Timeliness of SVOG Notifications
on Application Status (Estimated) 15
Table 10: Shuttered Venue Operators Grant Applicants,
Recipients, and Awards, by Business Size, as of
December 31, 2021 18
Table 11: Shuttered Venue Operators Grant Applicants and
Recipients, by Business Type, as of December 31, 2021 19
Table 12: Examples of Shuttered Venue Operators Grant Program
Activities That Reflect Selected Leading Practices for
Designing and Implementing an Antifraud Strategy 31
Table 13: Logic Model Activities, Outputs, and Outcomes for
Shuttered Venue Operators Grant Program 35
Table 14: Performance Measures and Targets for Shuttered
Venue Operators Grant (SVOG) Program 36
Table 15: Key Changes to Pre-Award Controls for the Shuttered
Venue Operators Grant Program, June 2021 53
Figures
Figure 1: Shuttered Venue Operators Grant (SVOG) Technical
Corrections and Appeals Process 6
Figure 2: Most Declined SVOG Applicants Viewed SBA
Information on the Reason for Their Denial as Not Useful 16
Figure 3: Approval Rates for Shuttered Venue Operator Grants, by
Business Size, as of December 31, 2021 19
Page ii GAO-23-105199 Shuttered Venue Operators Grant
Figure 4: Approval Rates for Shuttered Venue Operators Grants,
by Business Type, as of December 31, 2021 20
Figure 5: Approval Rates for and Number of Shuttered Venue
Operator Grants (SVOG), by State, as of December 31,
2021 22
Figure 6: Ratio of Shuttered Venue Operators Grant Recipients to
Population of Potentially Eligible Arts and Entertainment
Businesses, by State 24
Figure 7: Status of Shuttered Venue Operators Grant Initial Award
Applications, April 26, 2021–February 7, 2022 51
Figure 8: Application Processing Time for Shuttered Venue
Operators Grant, as of December 31, 2021 52
Abbreviations
EIDL Economic Injury Disaster Loan
FAQ frequently asked questions
IRS Internal Revenue Service
NAICS North American Industry Classification System
OIG Office of Inspector General
OMB Office of Management and Budget
PPP Paycheck Protection Program
RRF Restaurant Revitalization Fund
SBA Small Business Administration
SVOG Shuttered Venue Operators Grant
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Page iii GAO-23-105199 Shuttered Venue Operators Grant
Letter
441 G St. N.W.
Washington, DC 20548
October 11, 2022
Congressional Committees
The COVID-19 pandemic created economic hardships for businesses in
the arts and entertainment industries, such as museums, performing arts
and live music venues, and movie theaters. 1 Revenue declines at these
businesses threatened their viability and resulted in job losses. For
example, according to the Bureau of Labor Statistics, the unemployment
rate for the arts, entertainment, and recreation industry reached 47
percent in April 2020—over 1.2 million job losses since March 2020—and
it remained elevated into 2021.
To assist these businesses, the Consolidated Appropriations Act, 2021,
enacted in December 2020, authorized the Shuttered Venue Operators
Grant (SVOG) program and appropriated $15 billion to the Small
Business Administration (SBA) to implement it. The American Rescue
Plan Act of 2021, enacted in March 2021, appropriated an additional
$1.25 billion for the program.
The CARES Act includes a provision for us to monitor and oversee the
federal government’s efforts to prepare for, respond to, and recover from
COVID-19. 2 In October 2021, we reported on SBA awarding of SVOG
funds, and challenges it faced implementing the program. 3 In this report,
we examine (1) how applicants viewed SVOG communications and the
application process; (2) characteristics of SVOG applicants and
recipients; (3) steps SBA took to identify ineligible and fraudulent
applications and manage fraud risks, and the extent to which SBA’s
control activities reflect selected leading practices; and (4) how SBA
measures SVOG program performance.
For the first objective, we surveyed a generalizable sample of 998 SVOG
applicants, stratified by award status and business size. We conducted
the survey between February 2022 and April 2022. We received 504
1In this report, we refer to all entities in the arts and entertainment industry, including
nonprofits, as businesses.
2Pub. L. No. 116-136, § 19010(b), 134 Stat. 281, 580 (2020). All of GAO's reports related
to the COVID-19 pandemic are available on GAO's website at
https://www.gao.gov/coronavirus.
3GAO, COVID-19: Additional Actions Needed to Improve Accountability and Program
Effectiveness of Federal Response, GAO-22-105051 (Washington, D.C.: Oct. 27, 2021).
Page 1 GAO-23-105199 Shuttered Venue Operators Grant
responses and obtained a weighted response rate of 60 percent. 4 We
reviewed application guidance and analyzed changes to guidance over
time. In addition, we reviewed SBA’s Strategic Plan for Fiscal Years
2022─2026. We interviewed officials from SBA’s Office of Disaster
Assistance, which administers the SVOG program, and trade groups that
represented SVOG-eligible businesses, such as performing arts
organizations, theatrical producers, movie theaters, and museums.
For the second objective, we analyzed application-level data from SBA as
of December 31, 2021—the most recent grant-level data available at the
time of our analysis. We assessed the reliability of SVOG data by
reviewing related documentation, conducting data testing to check for
outliers and errors, and interviewing agency officials. We determined that
the data were sufficiently reliable for describing the characteristics of
applicants and recipients by business size, type, and location. Using the
applicant-level data, we also developed multivariate regression models to
determine how different applicant characteristics (such as geography)
affected the likelihood of a business being approved for an award. We
also used the results of our survey to estimate the number of applicants
who appealed their award decision. To estimate the proportion of
potentially eligible businesses that received SVOG awards, we analyzed
the Bureau of the Census’ 2019 County Business Patterns dataset, which
provides data by geography, industry, and employment size.
For the third objective, we reviewed agency documents on internal control
procedures and interviewed agency officials. These documents included
SBA’s guidance to application reviewers, procedures for reviewing and
referring applications with potential fraud issues to SBA’s Office of
Inspector General, and plans to monitor SVOG grantees for potential
fraud and improper payment issues. We compared documentation of
SBA’s control-related activities against federal internal control standards
and leading practices in GAO’s Fraud Risk Framework for designing and
implementing an antifraud strategy. 5 We conducted limited testing of
SBA’s controls by applying for an SVOG award using three fictitious
businesses we created. We also conducted limited comparisons of SVOG
data with data for other COVID-19 relief programs administered by SBA
4We used a weighted response rate because our survey sample incorporated strata with
different probabilities of selection. A weighted response rate may more accurately reflect
the level of participation. For example, units from large strata that contribute relatively
more to the estimate of a total would have a larger “weight” on the response rate.
5GAO, Standards for Internal Control in the Federal Government, GAO-14-704G
(Washington. D.C.: Sept. 10, 2014); and A Framework for Managing Fraud Risk in Federal
Programs, GAO-15-593SP (Washington, D.C.: July 28, 2015).
Page 2 GAO-23-105199 Shuttered Venue Operators Grant
and with the U.S. Postal Service address matching system to test
implementation of controls.
For the fourth objective, we reviewed agency documents, such as SBA’s
fiscal year 2023 Congressional Budget Justification and its performance
framework. We also interviewed officials from SBA’s Office of Disaster
Assistance and Office of Inspector General (OIG). For more information
about our scope and methodology, see appendix I.
We conducted this performance audit from April 2021 to October 2022 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives. We conducted our related
investigative work in accordance with standards prescribed by the Council
of the Inspectors General on Integrity and Efficiency.
Background
Overview of Shuttered Venue The SVOG program is administered by SBA’s Office of Disaster
Operators Grant Program Assistance, which collected grant applications through an online portal.
The portal opened on April 8, 2021, but shut down the same day because
of a software problem, reopening on April 26, 2021. 6 SBA closed the
program to new applicants on August 20, 2021, but continued to issue
supplemental awards and modifications to award amounts.
Eligibility requirements and funding conditions. SVOG terms and
conditions include restrictions on the types of eligible businesses, amount
of grants, and awards from other SBA programs (see table 1). 7 Eligible
businesses include live entertainment producers, organizations, and
venues. SVOG awards are to be used for expenses such as payroll and
rent. To be eligible for SVOG, businesses had to have been in operation
as of February 29, 2020, and lost at least 25 percent of their gross earned
6For additional information, see GAO-22-105051.
7Uniform administrative requirements, cost principles, and audit requirements for federal
awards, including grants, to nonfederal entities are established in 2 C.F.R. part 200.
Nonfederal entities do not include for-profit entities, although federal agencies may
nevertheless chose to apply the requirements of 2 C.F.R. part 200 to their for-profit grant
recipients. 2 C.F.R. § 200.101(a)(2). In its Notice of Funding Opportunity, SBA cited 2
C.F.R. part 200 as applicable to the SVOG program. 86 Fed. 16270 (Mar. 26, 2021).
Many SVOG grantees are for-profit entities.
Page 3 GAO-23-105199 Shuttered Venue Operators Grant
revenue during at least one quarter of 2020 (compared to the same
quarter in 2019). To be eligible for supplemental awards, grantees also
had to have lost at least 70 percent of gross earned revenue in 2021 as
compared to 2019. 8
Table 1: Examples of Eligibility and Funding Conditions for the Shuttered Venue Operators Grant Program
Condition Description
Type of business Live venue operators and promoters (venues and promoters), live performing arts organization
operators (performing arts), motion picture theater operators (movie theaters), museum
operators (museums), talent representatives, and theatrical producers.
Allowable expenses Expenses that enable ongoing business operations (e.g., payroll costs, rent or mortgage, utility
payments).
For recipients of initial grants, only expenses incurred between March 2020 and December
2021.
For recipients of supplemental grants, only expenses incurred between March 2020 and June
2022.
Award size limits Initial grant: equal to 45 percent of 2019 gross earned revenue, up to $10 million.
Supplemental grant: equal to 50 percent of initial grant, up to $10 million total award (initial and
supplemental grants).
Deadline for recipients to expend Initial grant only: within 12 months of disbursement from SBA.
funds Initial and supplemental grant: within 18 months of disbursement of the initial grant (if
supplemental grant received).
Source: GAO analysis of Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act and Small Business Administration (SBA) documentation. | GAO-23-105199
SVOG also has numerous unique requirements for each of the six eligible
business types. For example, live venue operators had to demonstrate
their venue had audio mixing equipment, a public address system, and a
lighting rig. In the SVOG application checklist, SBA noted the types of
documents that live venue operators could provide (such as receipts or
insurance documents) to prove the venue had this equipment.
SBA has several other pandemic relief programs for which arts and
entertainment businesses were eligible to apply, but cross-program
8Pursuant to statute, a grantee was eligible for a supplemental award if its first quarter
revenues of 2021 were no more than 30 percent of its 2019 first quarter revenues. 15
U.S.C. § 9009a(b)(3)(A). In early 2022, SBA announced that it was offering a second
round of supplemental awards for those grantees that did not qualify for them under the
first round. SBA expanded the eligibility evaluation criteria for the second round to include
a review of revenues for the third and fourth quarters of 2021. According to SBA, the
agency offered the additional round of supplemental funding because COVID variants had
negatively affected businesses during the third and fourth quarters of 2021. SBA stated its
expansion of the eligibility criteria was consistent with Congress’s express intent that all
“eligible persons or entities” be permitted to be eligible for supplemental awards (provided
funds were available) as well as with its prior determination that entities operating only in
2020 were eligible for initial awards, although a strict reading of the statute would have
made their initial awards $0.
Page 4 GAO-23-105199 Shuttered Venue Operators Grant
restrictions limited the assistance such businesses could receive in
addition to SVOG.
• Paycheck Protection Program (PPP). Arts and entertainment
businesses could apply for PPP loans. However, businesses that
received PPP loans after December 27, 2020, were to have their PPP
loan amounts deducted from their SVOG award. Businesses that
received SVOG funds could not apply for PPP after receiving an
SVOG award.
• Economic Injury Disaster Loan (EIDL). Arts and entertainment
businesses could apply for EIDL. However, businesses that received
funds from EIDL and SVOG could not use funds from these two
programs for the same purposes or costs.
• Restaurant Revitalization Fund (RRF). Arts and entertainment
businesses could not apply for funds from both RRF and SVOG. In
other words, those businesses that had a pending application for, or
received an SVOG award, were not eligible to apply for an RRF
award, and vice versa.
Technical corrections and appeals. SBA developed two processes to
allow applicants to amend and resubmit their applications (see fig. 1).
First, some applicants who did not sufficiently demonstrate eligibility for a
grant were invited to amend their application through the technical
corrections process. SBA indicated which eligibility criteria the applicant
had not sufficiently demonstrated on its application. According to SBA,
the agency implemented this process so as not to decline applicants
whose businesses appeared eligible but who had not submitted a few
documents.
Second, on July 22, 2021, SBA announced an appeal process open to all
declined applicants. Applicants who successfully demonstrated program
eligibility through appeal were awarded grants; those who did not were
declined and given no additional opportunity to appeal.
Page 5 GAO-23-105199 Shuttered Venue Operators Grant
Figure 1: Shuttered Venue Operators Grant (SVOG) Technical Corrections and
Appeals Process
Reconsideration. SBA announced through a July 22, 2021, update to its
guidance documents that it would invite all applicants who received an
award amount of at least $100 less than the proposed grant amount on
their application to have their award amount reconsidered. On November
17, 2021, SBA expanded reconsideration to all grantees to correct errors
on their applications that had led to smaller awards.
Supplemental grants. In an October 20, 2021, update to its frequently
asked questions (FAQ), SBA provided grantees with guidance for
obtaining supplemental grants. Eligible grantees received an email
notifying them that they were eligible to apply for a supplemental grant. In
March and April 2022, SBA notified grantees that did not qualify for
supplemental funding under the first round to apply using their earnings
from the third and fourth quarters of 2021. According to SBA, the agency
offered this additional round of supplemental funding because additional
COVID variants negatively affected businesses during these quarters.
Page 6 GAO-23-105199 Shuttered Venue Operators Grant
Thus, some businesses may have experienced more than 70 percent
losses during this period and would be eligible for supplemental funding.
SBA changed its SVOG program guidance multiple times and this created
Most Applicants challenges for many program applicants, according to our generalizable
Viewed SBA’s survey of 504 SVOG applicants. Applicants also generally reported that
SBA’s customer service was hard to access and did not provide
Program applicant-specific assistance. SBA does not have guidance that would
Communications address these communications challenges and lessons learned for future
programs it may implement similar to SVOG.
Negatively
SBA Changed Program Changing guidance. SBA frequently revised SVOG program guidance
Guidance Frequently and for potential applicants, including very shortly before opening (and
Applicants Experienced reopening) the application portal. From January to October 2021, SBA
Related Challenges published 12 versions of its FAQs, including two versions within 2 days of
the portal’s planned opening (April 8, 2021) and another version just
before its reopening (April 26, 2021). As shown in table 2, these three
versions contained numerous changes and additions that SBA identified
as significant.
Table 2: Significant Changes to SBA’s FAQs for the Shuttered Venue Operators Grant Program, March 22–April 23, 2021
Version 8 Version 9 Version 10 Total since version 7
(April 6) (April 8) (April 23) (March 22)
Changes to existing answers 9 2 38 49
Additional answers 64 29 13 106
Source: GAO analysis of Small Business Administration (SBA) documents. | GAO-23-105199
Note: The table addresses changes SBA identified as significant and not all changes to its frequently
asked questions (FAQ) documents.
Additionally, SBA published four versions of its application checklist,
including one on April 23, 2021, which was 3 days before the portal
reopening. 9 That version contained 10 additions (three technology
requirements for accessing the application portal and seven documents
applicants would have to provide to demonstrate eligibility). SBA also
published two versions of its application user guide, the first on April 8,
the day the portal opened, and the second on April 23, 3 days before the
reopening. 10 According to SBA officials, the agency updated its guidance
documents to accommodate user improvements to the application portal,
9The application checklist assists applicants with gathering and preparing necessary
materials for the SVOG application.
10The applicant user guide offers instructions to applicants for using the SVOG application
portal and completing applications.
Page 7 GAO-23-105199 Shuttered Venue Operators Grant
statutory changes to SVOG, and public feedback. For example, the
American Rescue Plan Act, signed into law on March 11, 2021, amended
SVOG eligibility requirements to allow borrowers who received PPP loans
after December 27, 2020, to also receive a grant. Therefore,
corresponding guidance was updated as regulatory clearances permitted.
Based on survey results, we estimate that 85 percent of applicants found
changes in program guidance to be at least somewhat challenging (see
table 3). 11
Table 3: Applicant Views on Changing SVOG Program Guidance (Estimated)
GAO survey question: How challenging, if at all, did you Extremely or Moderately or Not at all Not applicable/ Do
find changes in program guidance from the Small very somewhat challenging not remember/ No
Business Administration (e.g., frequently asked challenging challenging opinion
questions)?
All applicants 39% 46% 8% 8%
Approved applicants 33% 53% 9% 6%
Declined applicants 57% 26% 5% 12%
Source: GAO analysis of Shuttered Venue Operator Grant (SVOG) survey responses. | GAO-23-105199
Note: Estimates are based on survey responses obtained from a generalizable sample of SVOG
applicants. All estimates have a margin of error of less than plus or minus 9 percentage points. Rows
may not sum to 100 percent because of rounding.
Representatives of trade groups for movie theaters, theatrical producers,
and performing arts organizations told us their members were confused
by guidance for business model eligibility that appeared to change with
each FAQ update. For example, the February 12 update of the FAQs was
the first to state that university-based businesses were ineligible if their
parent university received more than 10 percent of its revenue from the
federal government. 12 The February 28 update was the first to state that
businesses based at public universities could be eligible regardless of
revenue the university received from the federal government.
According to SBA, the agency updated the FAQs as it became familiar
with the arts and entertainment industry, with which it had little prior
experience, and as a result of consultations with industry trade groups.
However, trade groups told us that confusion associated with changing
guidance could have been avoided if SBA had sought their input early
11Estimates included in this report are based on survey responses obtained from a
generalizable sample of SVOG applicants. All estimates in this report have a margin of
error of plus or minus 10 percentage points or fewer, unless otherwise noted.
12This applies to entities that are majority owned or controlled by a university.
Page 8 GAO-23-105199 Shuttered Venue Operators Grant
(during program design). Instead, trade groups had to react to guidance
revisions each time SBA published a new version.
Applicant preparedness. Based on survey responses, we estimate that
44 percent of applicants considered that the level of resources (time,
staff, and documents) needed to apply for SVOG was higher or much
higher than they expected based on the information SBA shared. Thirty-
eight percent of applicants considered the level of resources to be as
expected, and 15 percent considered it to be lower or much lower than
expected (see table 4).
Table 4: Actual Level of Resources Needed to Apply for SVOG Compared to Applicant Expectations (Estimated)
GAO survey question: Considering the information the Much higher As expected Lower or Do not know
Small Business Administration shared about the or higher much lower
program’s application process and requirements, how than than
did the level of resources required to complete the expected expected
application compare to your expectations? Resources
include time, staff, and documents.
All applicants 44% 38% 15% 3%
Approved applicants 44% 44% 10% 2%
Declined applicants 45% 18% 32% 6%
Source: GAO analysis of Shuttered Venue Operator Grant (SVOG) survey responses. | GAO-23-105199
Note: Estimates are based on survey responses obtained from a generalizable sample of SVOG
applicants. These estimates have a margin of error of less than plus or minus 9 percentage points.
Rows may not sum to 100 percent because of rounding.
We estimate that the process of gathering and preparing application
documents was challenging for 88 percent of applicants (see table 5).
According to SBA, applications typically had 30–100 documents
supporting businesses’ eligibility. While SBA developed a checklist of
required documentation for applicants, it was not intended to be definitive.
That is, the checklist did not name or describe all the materials an
applicant had to provide to support eligibility; instead, it included some
examples of documentation that could be submitted. According to SBA,
this approach provided flexibility for applicants that did not have a specific
document type.
Page 9 GAO-23-105199 Shuttered Venue Operators Grant
Table 5: Applicant Views on Gathering and Preparing Documents for SVOG (Estimated)
GAO survey question: How challenging, if at all, did you Extremely or Moderately or Not at all Not applicable/ Do
find gathering and preparing documents for your very somewhat challenging not remember/ No
application? challenging challenging opinion
All applicants 41% 47% 11% 2%
Approved applicants 37% 51% 12% 1%
Declined applicants 54% 35% 7% 4%
Source: GAO analysis of Shuttered Venue Operator Grant (SVOG) survey responses. | GAO-23-105199
Note: Estimates are based on survey responses obtained from a generalizable sample of SVOG
applicants. These estimates have a margin of error of less than plus or minus 9 percentage points.
Some rows do not sum to 100 percent due to rounding.
Views on SBA information sources. SBA used several methods to
share program guidance with potential applicants, but most applicants
deemed trade group information as more useful. Prior to applying, many
applicants received information about SVOG eligibility and requirements
through the SVOG website (an estimated 69 percent), SBA emails (54
percent), trade groups (42 percent), and SBA information sessions (27
percent). Fewer applicants received information from SBA social media
(10 percent) or SBA offices (9 percent). We estimate that about half of
approved applicants and about one-quarter of declined applicants
received this information from trade groups. One trade group told us that
it waived membership dues during the pandemic and that many small
businesses joined to learn about SVOG. Based on our survey results, we
estimate that a higher percentage of applicants found trade group
information extremely or very useful than SBA resources (see table 6).
According to SBA, from the inception of the program, the agency met
weekly with leaders of industry trade groups to address their questions
about SVOG, and SBA expected them to pass that information on to their
members.
Table 6: Applicant Views of Selected Information Sources on SVOG Eligibility and Requirements (Estimated)
GAO survey question: Prior to applying, Extremely or very Moderately or Not useful No opinion
how useful were each of the following useful somewhat useful
resources at informing you about SVOG
program eligibility and requirements?
Trade groups relevant to your industry 74% 23% 1% 2%
Information sessions hosted by Small 59% 38% 3% 0%
Business Administration (SBA)
SVOG website 56% 39% 5% 1%
SBA emails 51% 41% 7% 1%
Source: GAO analysis of Shuttered Venue Operator Grant (SVOG) survey responses. | GAO-23-105199
Page 10 GAO-23-105199 Shuttered Venue Operators Grant
Note: Estimates are based on survey responses obtained from a generalizable sample of SVOG
applicants. These estimates have a margin of error of less than plus or minus 9 percentage points.
Rows may not sum to 100 percent because of rounding.
Applicants Faced Challenges Many SVOG applicants reported that SBA’s customer service was hard to
Getting Answers to Application access and did not provide applicant-specific assistance. Applicants
Questions viewed two additional resources—”office hours” and a high-level support
team—as limited, not timely, and not well-known.
SBA Customer Service
GAO Covert Investigation
We estimate that 62 percent of applicants called an SBA customer
support service center for assistance with their initial application and 44
percent sought assistance by email. Most SVOG applicants experienced
issues connecting with customer service and receiving answers specific
to their business.
Most applicants who called SBA’s customer service center reported
issues connecting with a representative, and many were unable to speak
with someone. Of those who called during their initial application, an
estimated 80 percent experienced at least one of the following issues:
We created three fictitious businesses to
long wait times (52 percent), multiple calls needed to reach someone (51
covertly test fraud and eligibility controls for percent), phone call disconnected (26 percent), phone call transferred to
the Shuttered Venue Operators Grant multiple representatives (39 percent), or phone call transferred to a
(SVOG) program (discussed later). We
experienced challenges connecting with representative of a different SBA program (26 percent). An estimated 38
customer support services. For example, five percent of applicants were not able to speak with someone.
of the six times we covertly contacted the
customer support phone line with an Additionally, customer service centers could not provide applicant-specific
application question, we were told to email
the Small Business Administration (SBA); the
answers to questions. According to SBA, customer support staff were
other time our call was disconnected. When limited by regulations and procedures in the responses they could provide
we emailed SBA the question, the agency to applicant-specific questions on SVOG eligibility, potential grant
referred us to the customer support phone
line. In one instance, we were connected with amount, or other detailed information in order to prevent applicants from
a customer service representative for the gaining a competitive advantage. 13 Nevertheless, officials stated that the
Economic Injury Disaster Loan program, who
incorrectly told us SVOG was a state grant agency took steps to help applicants with the application process by
program and not run by SBA.
Source: GAO. | GAO-23-105199
13According to SBA, 2 C.F.R. § 200.205 placed limits on the information its staff could
provide in response to applicants’ questions. Under 2 C.F.R. § 200.205, a federal agency
must design and execute a merit review process for applications for a discretionary award.
The process objectively evaluates federal award applications in accordance with the
agency’s written standards. It must be described or incorporated by reference in the
funding opportunity. SBA also cited Standard Operating Procedure 00 18 01, Federal
Assistance Policy Directive (Grants), which requires that no grant applicant receive a
biased competitive advantage and instructs that SBA staff must avoid any semblance of
preferential treatment or give any applicant an unfair advantage over another, limiting any
guidance or direction that could be given to any individual applicant.
Page 11 GAO-23-105199 Shuttered Venue Operators Grant
implementing a technical corrections process and setting up a high-level
support team (discussed later). 14
Trade groups said customer support services did not meet applicants’
needs because they could not answer questions specific to an
application. In response to specific questions, customer service centers
directed callers to guidance documents on the SVOG website or told
them to email SBA for assistance. One trade group said its members
reported the customer support phone line directed them in circles and did
not provide useful answers.
Office Hours and Support Team
SBA created two additional resources—office hours and a high-level
support team—that could provide applicants that had not yet been
approved for awards with answers to their questions. However, these
resources were limited in availability and were established in late July
2021, after SBA approved awards to more than two-thirds of applicants.
According to SBA, it waived its standard operating procedures in June
2021 to allow the agency to provide narrowly tailored answers to certain
questions through the high-level support team.
SBA held five office hours in July 2021 to provide applicants who had not
yet been approved for awards with guidance from SBA staff. 15 According
to SBA, the agency solicited questions from applicants to determine the
topics to cover. The first three sessions, which were available to
applicants in priority groups, covered portal navigation, action items,
registration in the System for Award Management (SAM.gov), and notice
of awards. 16 The last two sessions were open to all active applicants and
discussed entity-specific technical corrections in addition to the prior
14SBA issued a waiver of the provisions of Standard Operating Procedure 00 18 01 that it
noted could be construed as restricting its ability to reconsider SVOG applications denied
due to the applicants’ good faith mistakes or omissions.
15The agency held an office hour session on August 4, 2021, to provide declined
applicants with guidance about the appeal process. The agency also has held many
office-hour sessions for grantees to provide guidance about the reconsideration and post-
award processes.
16Priority groups were based on revenue loss and were established in statute. During the
first 14 days of the program, SBA had to award grants only to businesses with at least 90
percent revenue loss from April through December 2020 as compared to the same period
in 2019 due to the COVID-19 pandemic; during the next 14 days, it had to award grants
only to businesses with at least 70 percent revenue loss. SAM.gov is a website that
entities use to register to bid on federal government contracts or receive federal
assistance.
Page 12 GAO-23-105199 Shuttered Venue Operators Grant
topics. Each session reserved time for applicants to ask questions, but
applicants were told that questions outside the scope of the presentation
topics would not be addressed. According to SBA, questions outside the
presentation’s scope or very specific to an individual were not addressed
because of limited time and the need for applicability to the general
audience.
SBA also established a high-level support team. Unlike other customer
support representatives, members of this support team had access to
applications, which better positioned them to answer applicant questions.
Applicants who attended office hours were told they could submit
questions to high-level support team members. According to SBA, many
of these questions concerned eligibility and thus the high-level support
team was limited in the responses they could provide (to prevent
applicants from gaining a competitive advantage). SBA also informed
trade groups that emails requesting high-level support in the subject line
would be routed to the high-level support team for answers. One trade
group told us it sent its members’ questions to the high-level support team
and received better responses than for questions directed though the
usual customer support channels. According to SBA, the customer
service center could refer questions to the high-level support team for
follow-up.
However, few SVOG applicants were aware of the high-level support
team. According to SBA, the agency did not publicize the team on its
website or through emails to applicants because they did not want it to
receive a high volume of questions from applicants at once. 17 Instead,
they opted to share information about the team through trade
organizations and during office hours. Based on our survey results, we
estimate that 86 percent of applicants were unaware of high-level support
before their application was approved or declined.
Most Declined Applicants SBA provided little notice of the application portal reopening. We also
Reported That Notifications estimated that most applicants who were declined awards viewed
Were Not Useful notifications as not useful or timely.
Portal reopening. SBA provided little notice to potential applicants on the
portal reopening. When SBA announced the portal closure on April 8,
2021, it did not provide a time frame for reopening. On April 23, SBA
announced it would reopen the portal the following day (April 24).
17According to SBA, the phone number and email address for the customer service center
was published on the SVOG website and included in all outgoing email blasts to
applicants and grantees. However, neither the webpage nor email blasts mentioned the
high-level support team.
Page 13 GAO-23-105199 Shuttered Venue Operators Grant
However, later that day it announced a new date for the reopening (April
26). According to SBA, it revised the date to April 26 after hearing
concerns from stakeholders about reopening on a Saturday. Applicants
developed more negative views about SBA communications after the
agency closed the application portal (see table 7).
Table 7: Applicant Views of Small Business Administration (SBA) Communication on the SVOG Application Portal (Estimated)
GAO survey question: How useful did you find Extremely or very Moderately or Not useful at Did not receive/
SBA’s communication (emails, tweets, website, useful somewhat useful all no opinion
etc.) about the program’s opening date and how
to apply using the online application portal?
Before April 8, 2021 43% 41% 11% 5%
After April 8, 2021 33% 39% 21% 7%
Source: GAO analysis of Shuttered Venue Operator Grant (SVOG) survey responses. | GAO-23-105199
Note: Estimates are based on survey responses obtained from a generalizable sample of SVOG
applicants. These estimates have a margin of error of less than plus or minus 5 percentage points.
Application status. An estimated 61 percent of approved SVOG
applicants viewed SBA notifications about the status of their application to
be extremely or very useful. In contrast, 62 percent of declined applicants
who appealed their award decision reported that these notifications were
not at all useful (see table 8). Declined applicants received invitations to
appeal their award decision via the application portal. Although SBA
provided one of eight high-level reasons for declining an applicant, they
did not indicate what additional information applicants would need to
include in their appeal.
Table 8: Applicant Views of the Usefulness of SVOG Notifications on Application Status (Estimated)
GAO survey question: How useful were the notifications Extremely or Moderately or Not at all No opinion
from the Small Business Administration on the status of very useful somewhat useful
your application? useful
After submitting initial application, approved applicants 61% 33% 6% 1%
After submitting initial application, declined applicants 24% 41% 34% 1%
After submitting appeal 15%a 22%a 62%a 1%
Source: GAO analysis of Shuttered Venue Operator Grant (SVOG) survey responses. | GAO-23-105199
Note: Estimates are based on survey responses obtained from a generalizable sample of SVOG
applicants. All estimates have a margin of error of less than plus or minus 10 percentage points
unless otherwise noted. Rows may not sum to 100 percent because of rounding.
aThe margin of error was plus or minus 10–12 percentage points.
We estimate that about 49 percent of applicants who appealed their
application decisions viewed SBA’s notifications on the status of their
appeals as not timely compared to 12 percent of approved applicants
(see table 9). According to SBA, the review process for applicants flagged
Page 14 GAO-23-105199 Shuttered Venue Operators Grant
as ineligible resulted in a much longer decision-making timeline for some
declined applicants.
Table 9: Applicant Views of the Timeliness of SVOG Notifications on Application Status (Estimated)
GAO survey question: How timely were the notifications Extremely or Moderately or Not at all No opinion
from the Small Business Administration on the status of very timely somewhat timely
your application? timely
After submitting initial application, approved applicants 44% 40% 12% 3%
After submitting initial application, declined applicants 15% 40% 44% 0%
After submitting appeal 11%a 38%a 49%a 2%
Source: GAO analysis of Shuttered Venue Operator Grant (SVOG) survey responses. | GAO-23-105199
Note: Estimates are based on survey responses obtained from a generalizable sample of SVOG
applicants. All estimates have a margin of error of less than plus or minus 10 percentage points
unless otherwise noted. Rows may not sum to 100 percent because of rounding.
aThe margin of error was plus or minus 10–12 percentage points.
Reasons applicants were declined. We estimate that for declined
applicants, 62 percent viewed SBA information on reasons for declining
their application as not at all useful, and 25 percent believed SBA did not
provide this information (see fig. 2). Starting in August 2021, SBA sent
notifications to declined applicants that provided the reason the applicant
was declined. According to SBA, most declined applicants did not meet
one or more eligibility criteria. But the notice did not specify which criteria
were not met. According to one trade group, these applicants were often
confused about why they were not eligible. In response to stakeholder
feedback, SBA modified the information provided in its decline notices,
beginning in November 2021. In addition to stating the applicant had been
declined, the new version of the notices also listed all 16 possible reasons
(such as an incomplete application). 18 However, for applicants who were
notified that they did not meet one or more eligibility criteria, this change
18The 16 reasons for which an application may be declined were (1) not fully operational
on February 29, 2020; (2) not currently open, in operation, or representing live talent; (3)
lacked the required minimum 25 percent gross earned revenue loss; (4) issues securities
on a national securities exchange (or owned by an entity that does so); (5) more than 10
percent of 2019 income came from federal resources; (6) owned/operated a venue in
more than one country, owned/operated a venue in more than 10 states, and had more
than 500 full-time equivalent employees; (7) currently suspended or debarred from
contracting with the federal government or receiving federal grants or loans; (8) in the past
5 years, was convicted, pled guilty, or pleaded nolo contendere under specified
conditions; (9) presented live performances of a prurient sexual nature; (10) did not meet
the principal business activity standard for the entity type under which applied; (11) did not
meet one or more of the eligibility criteria specific to the entity type under which applied;
(12) met limit for affiliates; (13) application withdrawn; (14) incomplete application; (15)
failure to abide by terms and conditions; and (16) submitted documents that could not be
verified.
Page 15 GAO-23-105199 Shuttered Venue Operators Grant
did not provide information on the criteria they did not meet. In March
2022, SBA began providing this information to declined applicants who
requested it.
Figure 2: Most Declined SVOG Applicants Viewed SBA Information on the Reason
for Their Denial as Not Useful
GAO’s survey question: How useful was the information the Small
Business Administration (SBA) provided for the reason your
application was declined?
Note: Estimates are based on survey responses obtained from a generalizable sample of SVOG
applicants. These estimates have a margin of error of less than plus or minus 9 percentage points.
SBA Lacks Communications SBA lacks a comprehensive strategy for communicating with potential or
Guidance That Would Address actual program applicants to emergency assistance programs that would
Industry-Specific Programs encompass situations in which programs do not offer loans or are scoped
Such as SVOG nationally or to a specific industry or both. SBA has two plans that guide
communication and disaster response, the Outreach and Marketing Plan
and the Disaster Preparedness and Recovery Plan. Both of these plans
focus on existing loan programs for regional natural disasters that serve
all businesses. However, SVOG is a new grant program that is national in
scope and serves a specific industry.
Additionally, SBA has not updated either plan to reflect issues that arose
with SVOG, including the challenges discussed above relating to
communicating with industry-specific applicants in a timely and effective
manner. According to SBA, the agency will update the Disaster
Page 16 GAO-23-105199 Shuttered Venue Operators Grant
Preparedness and Recovery Plan in fall 2022, and as of July 2022 was
re-evaluating the format and goals of its Outreach and Marketing Plan.
One of SBA’s strategic goals is to build resilient businesses after
disasters. Its strategic plan notes the COVID-19 pandemic has shown
that disasters come in many forms and may affect certain sectors more
than others. 19 Agency strategies for this goal include administering loan
and grant programs equitably and expediently; promoting transparency of
data and resources across communities, including by supporting small
businesses with timely information; and leveraging technology to expedite
disaster application processing, including by using customer survey data
to identify areas for improvement in relation to customer satisfaction. The
plan also states that SBA is committed to improving customer service to
create a better experience for small businesses.
In our July 2021 report on the EIDL program, we found SBA lacked
guidance on the type of information that loan applicants would need to
understand and participate in a disaster program, when such information
was to be provided, and how applicants could access it. 20 We
recommended that SBA develop a comprehensive strategy for
communicating with potential and actual program applicants in the event
of a disaster. We stated that this strategy should include guidelines on
providing information for the types and timing of information to be
provided to program participants in different stages of the loan process.
SBA agreed with the recommendation and started plans to develop such
a strategy, with a draft expected by September 30, 2022. But our
recommendation was specific to our findings about EIDL, and the agency
may not implement it in a way that addresses our findings about SVOG.
By developing a comprehensive communications strategy that addresses
problems the SVOG program experienced, and the lessons learned from
it, SBA would be better positioned to communicate information in a timely
and effective manner about future emergency programs that may offer
grants instead of loans, are national in scope, or industry-specific.
19Small Business Administration, Strategic Plan, Fiscal Years 2022–2026 (Washington
D.C.: Mar. 28, 2022).
20GAO, Economic Injury Disaster Loan Program: Additional Actions Needed to Improve
Communication with Applicants and Address Fraud Risks, GAO-21-589 (Washington,
D.C.: July 30, 2021).
Page 17 GAO-23-105199 Shuttered Venue Operators Grant
Nearly three-quarters of businesses that applied to the SVOG program
Most Applicants and received an award. More than 90 percent of these awards went to
Recipients Were businesses with 50 employees or fewer, and award rates varied by type
of business and state.
Small Businesses
with 50 or Fewer
Employees
SBA Approved Awards for 73 SBA approved about 73 percent of the 17,328 applications it received,
Percent of SVOG Applicants, according to our analysis of SBA data as of December 31, 2021. Smaller
with 90 Percent Going to businesses made up the largest share of SVOG applications and awards.
Smaller Businesses Businesses with 50 employees or fewer received more than 90 percent of
all awards and about 62 percent of the award dollars, as of December 31,
2021 (see table 10). Businesses with 50 or fewer employees also made
up over 90 percent of applicants. SBA was required to reserve $2 billion
in grant funds for businesses with 50 or fewer employees. 21 Businesses
with 101–500 employees had the highest median award (about $4.7
million). Because SVOG awards are calculated based on revenues,
businesses with the largest revenues were eligible for the largest awards.
Table 10: Shuttered Venue Operators Grant Applicants, Recipients, and Awards, by Business Size, as of December 31, 2021
Number of Number of Number of Percent of Total Median award amount
employees grant grant all awards grant amount
applicants recipients (in billions)
10 or fewer 11,773 8,159 64.2% $3.5 $148,533
11–50 4,199 3,358 26.4% $4.8 $714,146
51–100 661 569 4.5% $2.1 $2,442,148
101–500 572 503 4.0% $2.6 $4,722,970
501–999 58 51 0.4% $0.2 $2,680,796
1,000 or more 65 59 0.5% $0.2 $1,205,144
Source: GAO analysis of Small Business Administration data. | GAO-23-105199
As shown in figure 3, businesses with 1,000 or more employees had the
highest application approval rates (about 90 percent). Businesses with 10
or fewer employees had the lowest approval rate (about 70 percent).
2115 U.S.C. § 9009a(b)(2)(E). Under some circumstances, businesses with more than 500
employees were ineligible for SVOG awards. See 15 U.S.C. § 9009a(a)(1)(A)(vi)(II)(cc).
Page 18 GAO-23-105199 Shuttered Venue Operators Grant
Figure 3: Approval Rates for Shuttered Venue Operator Grants, by Business Size,
as of December 31, 2021
Note: The percentages may not sum to 100 percent because of the small percentage of applications
that were pending as of December 31, 2021.
Most Grant Awards Went to From April 2021 to July 2022, SBA awarded $14.6 billion in grants to over
Venues and Promoters, but 13,000 businesses in the arts and entertainment industry. 22 Among
Movie Theaters Had the business types, the majority of SVOG grant awards went to venues and
Highest Approval Rate promoters (37 percent) and performing arts organizations (26 percent)—
close to $8 billion in awards (see table 11). Movie theaters had the
highest median award amount (about $550,000) and performing arts
organizations the lowest (about $158,000).
Table 11: Shuttered Venue Operators Grant Applicants and Recipients, by Business Type, as of December 31, 2021
Business type Number of grant Number of grant Percent of all Total Median award
applicants recipients awards grant amount (in amount
billions)
Venues and promoters 7,133 4,713 37% $5.6 $375,682
Performing arts 4,157 3,295 26% $2.2 $158,411
22Small Business Administration, Shuttered Venue Operators Grant Public Report,
(Washington, D.C.: July 5, 2022). All other numbers in this section are based on our
analysis of SVOG data as of December 31, 2021.
Page 19 GAO-23-105199 Shuttered Venue Operators Grant
Talent representatives 2,202 1,360 11% $0.7 $169,590
Movie theaters 1,692 1,591 13% $2.4 $552,541
Theatrical producers 1,187 936 7% $1.0 $191,928
Museums 957 804 6% $1.3 $364,740
Source: GAO analysis of Small Business Administration data. | GAO-23-105199
As shown in figure 4, SBA approved awards for movie theaters at the
highest rate (94 percent) among business types, and talent
representatives at the lowest rate (62 percent).
Figure 4: Approval Rates for Shuttered Venue Operators Grants, by Business Type,
as of December 31, 2021
Note: The percentages may not sum to 100 percent because of the small percentage of applications
that were pending as of December 31, 2021.
We estimate that 75 percent of declined applicants appealed their award
decisions, based on our survey. 23 According to SBA officials, as of July
28, 2022, the agency approved 22 percent of applicants who were
previously declined.
23Estimates are based on survey responses obtained from a generalizable sample of
SVOG applicants. This estimate has a margin of error of less than plus or minus 10
percentage points.
Page 20 GAO-23-105199 Shuttered Venue Operators Grant
Approval Rates by State The number of approved applicants and approval rates varied by state.
Ranged from 57 to 97 Percent, California had the largest number of businesses approved for awards
Which May Reflect Prevalence (1,871) and Wyoming the fewest (33), generally reflecting population
of Business Types differences. Total award dollar amount by state ranged from about $2
billion (California) to about $15 million (South Dakota). Utah had the
highest median award amount ($622,605) and Montana the lowest
($96,234).
The average approval rate was 73 percent nationwide, ranging from 57
percent in Georgia to 97 percent in South Dakota (see fig. 5). 24 This
variation may be based in part on the characteristics of businesses that
applied in each state. We analyzed this relationship and found that certain
types of businesses, such as movie theaters and theatrical producers,
were more likely to get SVOG awards and be in states with higher
approval rates. 25 As we noted previously, SBA data showed that movie
theaters had the highest approval rates among business types.
24Among U.S. territories, Guam had 86 percent of SVOG initial grants approved (12
awards), Puerto Rico had about 73 percent approved (66 awards), and the U.S. Virgin
Islands had 50 percent approved (two awards). There were no SVOG applications from
American Samoa or the Commonwealth of the Northern Mariana Islands.
25To examine the associations between approved applicants, states, and demographic
characteristics, we performed multivariate regression analyses. Our analysis also
indicated that other characteristics were associated with higher approval rates. For
example, we found that older businesses (older than 20 years) and nonprofit businesses
had a greater chance of being approved for an SVOG award and also were more likely to
be in the higher-approval states. For more information on our analysis, see app. I.
Page 21 GAO-23-105199 Shuttered Venue Operators Grant
Figure 5: Approval Rates for and Number of Shuttered Venue Operator Grants (SVOG), by State, as of December 31, 2021
Note: Percentage figures in each state represent the percentage of SVOG applicants that received
SVOG awards. The number of awards is given below the percentage figure.
Page 22 GAO-23-105199 Shuttered Venue Operators Grant
We also analyzed census data to estimate the proportion of eligible
businesses that received awards. 26 Based on this analysis, we estimate
that close to half of businesses in the arts and entertainment industry
received an award nationwide. Ratios of recipients relative to the
population of potentially eligible businesses varied by state (see fig. 6).
26For more information on the methodology used to develop these estimates, see app. 1.
Page 23 GAO-23-105199 Shuttered Venue Operators Grant
Figure 6: Ratio of Shuttered Venue Operators Grant Recipients to Population of Potentially Eligible Arts and Entertainment
Businesses, by State
Note: To estimate the population of potentially eligible arts and entertainment businesses, we used
the Census Bureau’s 2019 County Business Patterns dataset, which provides business data by
geography, industry, and employment size, among other traits. Industry classification for this dataset
is based on 2017 North American Industry Classification System codes. However, as the dataset
does not include variables that align with all SVOG eligibility requirements, such as required revenue
Page 24 GAO-23-105199 Shuttered Venue Operators Grant
loss, our analysis may overestimate the size of the eligible population. We were not able to develop
an estimate for U.S. territories because census data were not available for these geographies.
SBA created controls to identify ineligible or potentially fraudulent
SBA’s Pre-Award businesses before SVOG awards were approved and periodically
Controls Reflect assessed program risks. Some of SBA’s controls reflect leading practices
in GAO’s Fraud Risk Management Framework related to designing and
Some Leading implementing an antifraud strategy. However, contrary to leading
Practices and Post- practices in the framework, the agency’s draft procedures for monitoring
SVOG awards do not explicitly address risks the agency identified,
Award Controls Could including fraud-related risks.
Be Strengthened
SBA Established Pre-Award Pre-award Controls Included Reviews to Verify Identity and
Controls and Periodically Eligibility
Identified Program Risks
SBA’s pre-award controls for SVOG were intended to identify ineligible or
potentially fraudulent businesses before awards were approved, and they
included the following:
• Verification of business identities. Application reviewers were to
check applicants’ government-issued photo identifications to verify
identity. SVOG applicants were to register with websites that verify the
identity of businesses and government grantees—Dun & Bradstreet
and SAM.gov. 27
• Verification of financial information. Reviewers were to verify the
financial information from applicants, such as tax return information
and audited financial statements. Additionally, applicants were to
submit an Internal Revenue Service (IRS) Form 4506-T, which
authorizes IRS to share applicant tax data with SBA so the agency
could verify the information.
• Verification of eligibility. Application reviewers were to verify that
applicants met general eligibility requirements. For example,
reviewers were to verify bankruptcy status using Lexis Nexis, criminal
history through a background check, and eligibility for government
27Dun & Bradstreet assigns DUNS numbers—unique nine-digit identifiers used to verify a
business’ identity—and businesses use SAM.gov to register to do business with the
federal government.
Page 25 GAO-23-105199 Shuttered Venue Operators Grant
payments using Treasury’s Do Not Pay system. 28 In addition, SBA
developed questions and checklists for reviewers to verify business-
specific eligibility requirements, which could include corroboration of
applicant-provided information. For example, for movie theaters, the
guidance indicates that reviewers review floor plans showing where
the projection booth, motion picture screen, and fixed audience
seating were located to verify an applicant met these facility
requirements.
• Steps to avoid duplication of benefits. Application reviewers were
to check agency information from other pandemic relief programs
(RRF, PPP, and EIDL) to determine if SVOG applicants applied for or
received funding from these programs in a manner consistent with
program requirements. For example, if an applicant received a PPP
loan after December 27, 2020, the loan amount had to be deducted
from the SVOG award.
SBA also considered internal control standards in developing its pre-
award controls. For example, it developed pre-award controls based on
reviewing program risks. This was consistent with federal internal control
standards indicating management should (1) identify, analyze, and
respond to risks related to achieving the defined objectives, and (2)
design control activities to achieve objectives and respond to risks. 29
SBA Relaxed Some Pre-award Controls to Process Applications
Faster
In June 2021, SBA relaxed some of the SVOG program’s pre-award
controls to address delays in award processing. 30 While relaxing controls
may have implications for fraud risk management, SBA’s changes aligned
with controls for other emergency programs or incorporated strategies to
mitigate risk to the program. For example, SBA stopped independently
identifying undisclosed affiliates (awards were limited to no more than five
business entities of an eligible entity) and started to rely on applicant
28The Department of the Treasury’s Do Not Pay service is an analytics tool that helps
federal agencies detect and prevent improper payments made to vendors, grantees, loan
recipients, and beneficiaries. Agencies can use the service to check multiple data sources
to make payment eligibility decisions.
29GAO-14-704G.
30We describe key changes to the pre-award controls in more detail in app. III and discuss
application processing times for initial grants in app. II.
Page 26 GAO-23-105199 Shuttered Venue Operators Grant
attestations. 31 SBA officials stated they considered the costs and benefits
of the control and determined that SBA no longer needed to spend staff
time on investigations into affiliate status. However, according to SBA
officials, automated controls to mitigate the risk of undisclosed affiliates
remained, and the agency plans to review affiliate status in post-award
monitoring. 32
Additionally, SBA removed automatic verification reviews of applicant tax
information against IRS data for awards below a certain dollar threshold,
relying on applicant-provided information instead. 33 Agency officials noted
that their goal was to create a dollar threshold that reduced application
processing times, while still providing these reviews to higher-dollar
applications representing about 90 percent of the funds. According to
SBA, this approach aligned with SBA’s procedures for other programs,
such as RRF, which they said also did not check IRS data for all
applicants.
SBA also changed the payment method for awards from multiple
disbursements to a single disbursement. Using multiple disbursements
allowed SBA to withhold a portion of the award in the future if recipients
were subsequently found to be fraudulent or ineligible. According to SBA,
in June 2021, the agency changed to a single payment approach to align
with that of other emergency programs and to provide timely relief to
31According to program requirements, a maximum of five business entities related through
affiliation (for example, through common ownership, management, or contractual or other
legal arrangements) can receive an SVOG award. Prior to June 2021 revisions to SBA’s
application controls, suspected affiliates would be referred to SVOG application reviewers
who specialized in applications that were considered “complex,” such as business models
that rely on verbal contracts.
32According to SBA officials, the application portal was programmed to reject duplicate
applications for a single Taxpayer Identification Number unless related to a governmental
entity, which mitigated the risk of undisclosed affiliates. Agency officials also noted plans
to continue affiliate reviews in the post-award monitoring phase to investigate cases where
more than five applications appear to be affiliated.
33As an alternative to using IRS data, SBA officials noted they requested specific
documents from applicants, including audited financial statements, official IRS tax return
transcripts, IRS file stamped copies of federal tax returns, or copies of federal tax returns
with letters from certified public accountants attesting the returns were prepared and
submitted to IRS. According to SBA officials, the agency determined that these and other
documents were sufficient to validate applicants’ financial information.
Page 27 GAO-23-105199 Shuttered Venue Operators Grant
grantees. 34 In July 2022, SBA’s OIG reviewed the agency’s awards and
payment practices for SVOG and found that this change increased the
financial risks to the program. 35 SBA stated it plans to implement OIG’s
recommendation that it use a risk-based approach for disbursing award
funds for future disaster grant programs. 36
SBA Periodically Assessed Risks, but Focused on Fraud Risks after
Application Window Closed
SBA identified and evaluated risks to the program on four occasions. The
first of these assessments was in January 2021, shortly after the program
was established, and the second was in April 2021, just before SBA
started collecting grant applications. These first two assessments
generally described potential program risks, such as those related to
improper payments or technology challenges. 37 For each risk identified,
the assessments describe mitigation steps, the likely impact of the risk
considering mitigation strategies, and how the risk will be monitored.
SBA’s subsequent assessments focused on fraud-related risks facing the
program. 38 SBA conducted these assessments in September and
December 2021, after closing the SVOG application portal in August 2021
and after issuing most awards. According to SBA officials, the agency
conducted a fraud risk assessment for SVOG in response to our
recommendations on assessing fraud and improper payment risks in the
34SBA cited federal grant regulations (2 C.F.R. § 200.305) as its justification for changing
to a single-payment approach. That regulation requires that agencies time payments in
accordance with the actual, immediate cash requirements to carry out the purpose of a
program. According to SBA, it received several appeals from Congress stressing the
performing arts industry’s need for immediate emergency relief to stay solvent.
35Small Business Administration, Office of Inspector General, SBA’s Award and Payment
Practices in the Shuttered Venue Operators Grant Program, OIG-22-15 (Washington,
D.C.: July 5, 2022).
36OIG-22-15.
37An improper payment is defined as any payment that should not have been made or
that was made in an incorrect amount (including overpayments and underpayments)
under statutory, contractual, administrative, or other legally applicable requirements.
38GAO has separate ongoing work that examines, among other things, SBA’s
development of fraud risk assessments for SVOG and its other pandemic relief programs.
Page 28 GAO-23-105199 Shuttered Venue Operators Grant
PPP and EIDL programs. 39 The most recent assessment described eight
specific risks related to fraud, the likelihood of the risks, and controls to
mitigate them. SBA also determined the effectiveness of certain anti-fraud
controls through a scoring system. Moreover, the assessment noted the
likelihood and impact of residual risks (those that remain after mitigation
steps).
SBA Developed Fraud Review and Referral Procedures
SBA’s pre-award fraud review and referral procedures for SVOG describe
several layers of SBA review. SVOG application reviewers are to flag
applications they suspect of fraud and refer them to an SVOG fraud
investigation team. This team is to further review these applications and
refer those it suspects of fraud to the Office of Disaster Assistance’s fraud
review team. If the Office of Disaster Assistance also suspects fraud, it is
to refer the applications to SBA’s OIG for review. 40
As of June 2022, the Office of Disaster Assistance referred 257
applications to the OIG. 41 According to SBA, the applications that the
Office of Disaster Assistance referred to OIG were declined prior to, or
simultaneously with, referral. As of June 2022, SBA had awarded nine
applications before referring them to the OIG and declined the remaining
248 referrals. For applications that received awards prior to OIG referral,
39GAO issued a number of reports that addressed fraud and improper payments risks for
PPP and EIDL and made related recommendations. See GAO, COVID-19: Opportunities
to Improve Federal Response and Recovery Efforts, GAO-20-625 (Washington, D.C.:
June 25, 2020); COVID-19: Urgent Actions Needed to Better Ensure an Effective Federal
Response, GAO-21-191 (Washington, D.C.: Nov. 30, 2020); COVID-19: Critical Vaccine
Distribution, Supply Chain, Program Integrity, and Other Challenges Require Focused
Federal Attention, GAO-21-265 (Washington, D.C.: Jan. 28, 2021); and COVID-19:
Sustained Federal Action Is Crucial as Pandemic Enters Its Second Year, GAO-21-387
(Washington, D.C.: Mar. 31, 2021). SBA agreed with the recommendations in
GAO-21-387 and neither agreed nor disagreed with the recommendations in the other
reports. As of June 2022, SBA fully implemented the recommendation in GAO-20-625 and
has taken steps to address, but has not yet fully implemented, the remaining
recommendations.
40According to OIG officials, the OIG typically does not communicate its decision to
pursue or decline an investigation with the office that made the fraud referral. However,
SBA offices can request a status update for fraud referrals or may receive requests for
information related to active OIG investigations.
41The Office of Disaster Assistance referred a total of 317 applications to the OIG.
However, SBA subsequently retracted 60 referrals. As of June 2022, the SVOG fraud
investigation team had reviewed 575 applications. The Office of Disaster Assistance
reviewed 399 potentially fraudulent applications (394 referrals from the SVOG fraud
investigation team and an additional five referrals from external third-party sources).
Page 29 GAO-23-105199 Shuttered Venue Operators Grant
SBA officials noted that they wait for resolution from their general counsel
or OIG before taking further action.
Our Limited Tests Did Not Reveal Significant Weaknesses in
Controls
We did not identify significant weaknesses, based on our limited covert
testing of controls. As we previously mentioned, we created three
fictitious businesses to test fraud and eligibility controls. Although the
results were not generalizable, SBA’s controls identified these businesses
as ineligible. Furthermore, SBA declined the applications following our
appeal of SBA’s initial decisions. 42
Similarly, we did not identify significant weaknesses based on our limited
analysis of SVOG data we received as of December 31, 2021. 43
• A comparison with PPP data generally showed that SBA deducted
PPP loan amounts from SVOG awards (as is required for SVOG
recipients approved for a PPP loan after December 27, 2020). 44
• A comparison with U.S. Postal Service address data showed that
close to 98 percent of SVOG applicants had address information that
matched what was in the Postal Service address database.
• SVOG data showed that most recipients generally used certain valid
or eligible business identifiers.
In addition, we previously reported that after comparing SVOG and RRF
data, we found no examples of SVOG recipients receiving RRF funds
(which they are not permitted to do). 45
42SBA notified one of our fictitious businesses that it was approved for a supplemental
award, but no money was disbursed. The notification was likely erroneous because SBA
already had declined the fictitious business’ appeal and did not invite it to apply for a
supplemental award.
43See app. I for more information on the methodology used to conduct these analyses.
44In close to 11 percent of the SVOG awards we reviewed, the award was greater than
the applicant’s proposed award with their PPP loan amount deducted. In these instances,
we could not determine if the full PPP loan amount had been deducted because,
according to SBA officials, application reviewers adjusted some SVOG award amounts
upward after reviewing applicant revenue and other information. According to SBA
officials, fully testing controls related to PPP loans would involve a manual review of
SVOG files. They also noted that the agency’s post-award monitoring plans include steps
to determine whether PPP loans were appropriately deducted from SVOG awards.
45GAO, Restaurant Revitalization Fund: Opportunities Exist to Improve Oversight,
GAO-22-105422 (Washington, D.C.: July 14, 2022).
Page 30 GAO-23-105199 Shuttered Venue Operators Grant
Some of SBA’s Pre-award Some of SBA’s pre-award control activities for SVOG reflect selected
Activities Reflect Selected practices in GAO’s Fraud Risk Management Framework related to
Leading Practices for Fraud designing and implementing an antifraud strategy with specific control
Risk Management activities (see table 12). 46 For example, SBA outlined roles and
responsibilities for pre-award risk-management activities, designed
various controls to check applicant information against third-party
databases, developed plans for referring cases of suspected fraud to the
OIG, and coordinated with relevant parties to share information for fraud
risk management.
Table 12: Examples of Shuttered Venue Operators Grant Program Activities That Reflect Selected Leading Practices for
Designing and Implementing an Antifraud Strategy
SVOG pre-award Description Related leading practices
activities
Establishing roles and Although not a comprehensive strategy, SBA’s fraud Establish roles and responsibilities of those involved
responsibilities review and internal control procedures for the in fraud risk management activities, such as the
Shuttered Venue Operators Grants (SVOG) describe antifraud entity and external parties responsible for
the roles of individuals and offices within SBA fraud controls, and communicate the role of the OIG
responsible for implementing antifraud activities, to investigate potential fraud.
including the Office of Inspector General (OIG).
Design SBA’s Audit and Oversight Plan cites SVOG program Focus on fraud prevention over detection and
preventive control activities that include response to avoid a “pay-and-chase” model (that is,
• establishing requirements in the application to to avoid having to retrieve funds that already may
help SVOG identify and deter potentially have been spent), to the extent possible.
ineligible or fraudulent applications (e.g., DUNS
and Sam.gov registration);
• verifying application information against third-
party databases, and other SBA program
databases; and
• using checklists for each type of eligible
business.
46See GAO-15-593SP. The framework provides a comprehensive set of key components,
overarching concepts, and leading practices that serve as a guide for agency managers to
use when developing efforts to combat fraud in a strategic, risk-based way. As required
under the Fraud Reduction and Data Analytics Act of 2015 and its successor provisions in
the Payment Integrity Information Act of 2019, the leading practices of the framework are
to be incorporated into the Office of Management and Budget’s guidelines and agency
controls. Fraud and fraud risk are distinct concepts. Fraud involves obtaining something of
value through willful misrepresentation and is a determination to be made through the
judicial or other adjudicative system. Fraud risk exists when individuals have an
opportunity to engage in fraudulent activity, have an incentive or are under pressure to
commit fraud, or are able to rationalize committing fraud. Fraud risk can exist even if
actual fraud has not occurred. When fraud risks can be identified and mitigated, fraud may
be less likely to happen.
Page 31 GAO-23-105199 Shuttered Venue Operators Grant
Fraud referral SBA developed internal control procedures for Develop a plan outlining how the program will
reviewing and referring suspected fraud cases, respond to identified instances of fraud and ensure
including the roles of the SVOG Fraud Investigation the response is prompt and consistently applied.
Team, Office of Disaster Assistance’s Office of Internal Refer instances of potential fraud to the OIG or other
Controls, and the OIG. appropriate parties, such as law-enforcement
The SVOG program referred 257 applications to the entities or the Department of Justice, for further
OIG as of June 30, 2022. investigation.
Information sharing According to SBA officials, the Office of Disaster Establish collaborative relationships with internal
Assistance and staff that administer SVOG engaged in and external stakeholders to share information on
information sharing with other programs or agencies to fraud risks and emerging fraud schemes and
incorporate best practices into the SVOG program. lessons learned related to fraud control activities.
As of July 2022, SBA officials noted the agency was
leveraging fraud information from other SBA programs
to identify instances of potential fraud in the SVOG
program.
Source: GAO analysis of Small Business Administration (SBA) documentation and GAO’s Fraud Risk Framework. | GAO-23-105199
Note: We compared SBA’s activities against leading practices identified in our Fraud Risk Framework
(GAO-15-593SP). We focused on leading practices of the framework’s third component, “Design and
Implement a Strategy with Specific Control Activities to Mitigate Assessed Fraud Risks and
Collaborate to Help Ensure Effective Implementation.”
SBA Has Drafted Post-Award Compliance and Improper Payment Reviews
Monitoring Procedures, but
They Do Not Explicitly Address In February 2021, SBA developed an audit and oversight plan for
Identified Fraud Risks SVOG—as required by law—to document internal control policies and
procedures. 47 These procedures included SBA’s methodology for auditing
a sample of awards to assess eligibility determinations and recipients’ use
of funds. In April 2021, the OIG raised concerns about SBA’s initial
sampling approach. 48 The sample would have included a maximum of 10
audits for low-risk applications, although SBA expected these applications
to make up the bulk of awards. SBA officials noted that they submitted a
revised audit and oversight plan to Congress in December 2021. The
plan’s new methodology increases the sample size for low-risk
applications and includes auditing a statistically significant sample of
awards in each of three risk categories. In July 2022, OIG staff indicated
that the office had not yet assessed whether the revised sampling
approach addressed the concerns from the April 2021 report, but they
expected to assess this approach in future audit work.
Additionally, SBA developed plans to conduct monthly quality assurance
reviews on a random sample of awards (or a review of files with similar
characteristics) to identify instances of noncompliance and the potential
4715 U.S.C. § 9009a(f).
48Small Business Administration, Office of Inspector General, Serious Concerns About
SBA’s Control Environment and the Tracking of Performance Results in the Shuttered
Venue Operators Grant Program, 21-13 (Washington, D.C.: Apr. 7, 2021).
Page 32 GAO-23-105199 Shuttered Venue Operators Grant
for improper payments. The plans describe procedures for addressing
improper payments, including potential corrective actions such as
recovering funds. SBA also is to perform a quarterly improper payment
audit, the results of which would be included in the agency’s financial
report. According to SBA officials, the agency conducted a preliminary
assessment of the program’s first quarter fiscal year 2022 awards and
disbursements, and the results are still being finalized.
In July 2022, SBA provided us with a copy of draft procedures for
monitoring SVOG recipients’ compliance with the requirement to not use
funds from SVOG and EIDL for the same purpose. According to the
procedures, SBA will use a risk-based approach. Specifically, SBA will
determine the scope of the reviews based on risk category, suspicious
and flagged budget items, and cost categories susceptible to double
counting, such as personnel costs. The procedures also state that SBA
staff will search SBA and federal databases to identify other federal
awards that could be improperly used for the same purpose as SVOG
funds. 49
Draft Procedures for Fraud Reviews
SBA’s draft procedures for post-award monitoring discuss strategies to
identify and respond to suspected fraud, but they do not clearly link
planned efforts to the risks identified in periodic risk assessments. SBA
provided us with a copy of the draft procedures for post-award monitoring
in July 2022. According to SBA officials, the draft procedures were to be
finalized in August 2022.
SBA’s draft procedures include activities to identify and respond to
suspected fraud. For example, the procedures note that SBA staff will
conduct data matching quarterly to identify SVOG recipients that have
been flagged for fraud by other SBA programs. The procedures also
discuss the steps SBA staff should take if they suspect fraud while
reviewing an awarded file or documentation submitted by an award
recipient. Such steps can include evaluating the concern and escalating it
for further review or referral to the OIG. These activities reflect some
leading practices described in our Fraud Risk Framework. 50
49According to SBA, these procedures are derived from the allocability principles in the
Uniform Guidance, 2 CFR part 200. As stated in 2 C.F.R. § 200.405, “Any cost allocable
to a particular Federal award under the principles provided for in this part may not be
charged to other Federal awards . . . .”
50GAO-15-593SP.
Page 33 GAO-23-105199 Shuttered Venue Operators Grant
However, SBA’s draft procedures do not specifically connect risks
identified in its periodic assessments, in particular its two fraud-risk
assessments, to its planned monitoring activities. As previously noted,
SBA’s December 2021 fraud risk assessment describes eight specific
fraud-related risks. 51 For each risk, the assessment describes pre-award
mitigation steps and identifies residual risks that would require monitoring.
SBA’s draft procedures do not explicitly discuss seven of the eight fraud
risks previously identified. For example, SBA identified identity theft as a
potential fraud scheme (with residual risks) in its December 2021 fraud
risk assessment, but the draft procedures do not mention identity theft.
The draft procedures mention monitoring activities related to one risk—
businesses overstating their revenue losses. 52 In addition, the draft
procedures do not explicitly discuss whether the agency decided that the
risks were within its tolerance level for the program, or, if applicable, how
it would monitor risks that exceed the tolerance level. 53
Our Fraud Risk Framework underscores the importance of determining
fraud risk tolerance and considering the benefits and costs of control
activities to address identified residual risks, so that monitoring efforts and
resources are appropriately targeted. 54
SBA officials told us that their draft procedures do not explicitly mention
fraud risks identified in risk assessments because they intended for these
procedures to address a broader set of fraud risks than the assessments
identified. Nonetheless, having procedures that more explicitly link
monitoring activities to all risks identified in previous risk assessments
would better position SBA to detect and respond to fraud in a more
targeted manner.
51An earlier version of the fraud risk assessment from September 2021 described seven
fraud risks.
52SBA’s draft monitoring procedures state that agency staff should document any
concerns for potential fraud-related discrepancies in claimed revenues.
53According to Standards for Internal Control in the Federal Government, risk tolerance is
the acceptable level of variation in performance relative to the achievement of objectives.
GAO-14-704G.
54GAO-15-593SP.
Page 34 GAO-23-105199 Shuttered Venue Operators Grant
SBA used Office of Management and Budget (OMB) guidance related to
SBA Plans to performance measurement to develop its performance measures—
Measure SVOG outputs and outcomes—for SVOG. 55 Consistent with that guidance, SBA
created a logic model—a table that describes the relationship between
Performance planned activities and desired outcomes. 56
Outcomes SVOG staff developed the logic model in March 2021 to form the basis for
the program’s performance framework (see table 13). SVOG staff worked
with other SBA staff from the Office of Performance Management and
Chief Financial Officer, the Office of Disaster Assistance, and with
detailees from the Office of Entrepreneurial Development and Office of
Government Contracting and Business Development.
Table 13: Logic Model Activities, Outputs, and Outcomes for Shuttered Venue Operators Grant Program
Activities Outputs Short-term Intermediate Long-term
outcomes outcomes outcomes
Develop funding notice Number of grants approved and Percent of eligible Number of Number of jobs
Establish system to collect grant disbursed grant funds previously supported from
applications and process awards Amount of grants received by expended for shuttered venues previously
each eligible person or entity, persons and still in operation shuttered venues
Develop and issue communication venues one year after in operation
on the program for potential grant including any supplemental
recipients grants Percent of eligible grants received Revenue (dollars)
Number of active investigations grant funds earned from
Review grant applications and make expended for small previously
awards and audits of grants
venues (fewer than shuttered venues
Monitor grant progress and track Number of completed reviews 50 employees) in operation
performance and audits of grants under this
section, including a description
Conduct audits of grant recipients of any findings of fraud or other
and monitor program risk material noncompliance
Source: GAO analysis of Small Business Administration documents. | GAO-23-105199
SBA published its performance measures and targets for the SVOG
program in the agency’s fiscal year 2023 Congressional Budget
Justification. For one measure, SBA set performance targets for fiscal
years 2022 and 2023. For the other two measures, SBA will record
baselines in fiscal year 2022 and set targets in 2023 (see table 14).
55Outputs are the direct products and services delivered by a program and outcomes are
the results of those products and services. GAO, Performance Measurement and
Evaluation, GAO-11-646SP (Washington, D.C.: May 2, 2011).
56According to OMB Circular A-11 (Part 6, Section 230.10), a logic model generally
reflects an agency’s underlying theory for how the planned coordination and orchestration
of resources and activities will achieve the desired outcome or change in terms of
performance and impact at the organizational, operational, or programmatic levels.
Page 35 GAO-23-105199 Shuttered Venue Operators Grant
Table 14: Performance Measures and Targets for Shuttered Venue Operators Grant (SVOG) Program
Measure Fiscal year 2022 target Fiscal year 2023 target
Percent of SVOG recipients that continued or reopened operations 95 percent 95 percent
Number of active audit investigations Baseline To be determined
Percent increase in revenue of businesses assisted by SVOG Baseline To be determined
Source: GAO analysis of Small Business Administration information. | GAO-23-105199
In April 2021, the SBA OIG issued a management alert that noted SBA
had not developed required SVOG performance goals and suggested the
agency do so. 57 The OIG also said that without specific grantee
performance reporting requirements, stakeholders would disburse billions
without knowing whether SVOG grants successfully aided pandemic-
affected small businesses. According to the OIG, the performance
measures SBA subsequently established in its Congressional Budget
Justification address the OIG’s concerns about performance goals.
SBA plans to measure how SVOG grantees spent funds, has been
developing an evaluation framework for measuring outcomes, and plans
to gather performance information from a survey of grantees, its own
data, and census data.
• Short-term outcomes: SBA plans to measure how grantees
expended funds, including during certain time periods across the
SVOG grant portfolio, and how much businesses with fewer than 50
employees expended. As SBA moves to the monitoring, audit, and
closeout phase of the program, it plans to track expenditures.
According to SBA, as of July 2022, the agency still was requesting
and approving final budgets from all grantees, and had not begun
tracking final expenditures.
• Intermediate outcomes: According to SBA, the agency has been
working with a third party to develop an outcome evaluation
framework. SBA will use the data from a grantee closeout survey and
administrative data from the SVOG portal to evaluate the impact of
the program on businesses’ continued operations. SBA officials
expect the evaluation to take 18 months to complete.
57Small Business Administration, Office of Inspector General, Serious Concerns About
SBA’s Control Environment and the Tracking of Performance Results in the Shuttered
Venue Operators Grant Program. According to 2 C.F.R. § 200.211, performance goals,
indicators, targets, and baseline data must be included in the federal award, where
applicable. The awarding agency must specify how performance will be assessed in the
terms and conditions of the award, including the timing and scope of expected
performance.
Page 36 GAO-23-105199 Shuttered Venue Operators Grant
• Long-term outcomes: According to SBA, the agency entered into a
joint statistical arrangement with the Census Bureau. Census will
create statistically significant comparison groups to measure the
impact of SVOG grants on the number of jobs supported, changes in
revenue, and changes in wages and salaries. According to SBA, the
agency anticipates the results of evaluation will be available in fiscal
year 2024.
In response to the COVID-19 pandemic, SBA awarded grants to more
Conclusions than 13,000 businesses in the hard-hit arts and entertainment industry—a
vast majority of which had 50 employees or fewer. Because SVOG
offered financial assistance in the form of grants and targeted a specific
industry, it represents a departure from SBA’s usual emergency
assistance programs, and offers learning experiences.
More specifically, the dissatisfaction of SVOG applicants with SBA’s
communications and customer support suggests there are lessons to be
learned for future emergency response efforts. Because SBA’s existing
plans for communication during disasters or emergencies focus on
regional loan programs serving all small businesses, they are not well-
suited for a program like SVOG, a national grant program serving a
specific industry. A more comprehensive communications strategy would
better position SBA for future emergency assistance programs,
particularly those that may differ from its existing programs.
Because some grantees have passed or are approaching the deadline to
spend their awards, SBA has pivoted toward the monitoring (post-award
phase) of SVOG. But the agency’s draft monitoring procedures do not
specifically discuss risks identified in its fraud-risk assessments or link
those risks to monitoring activities. SBA also removed certain antifraud
controls to expedite award processing. By implementing monitoring
procedures that specifically address the residual and other risks it
identified for SVOG awards, SBA could improve its ability to identify and
address fraud among SVOG grantees. Such procedures also could help
mitigate potential fraud risks resulting from removal of certain controls.
We are making the following two recommendations to SBA:
Recommendations for
Executive Action The Associate Administrator of SBA’s Office of Disaster Assistance
should develop a comprehensive strategy for communicating with
potential and actual grant program applicants in the event of a disaster or
other emergency. Such a strategy should provide guidelines for how to
communicate information in a timely and effective manner during
nationwide emergencies (such as pandemics) and for doing so for any
Page 37 GAO-23-105199 Shuttered Venue Operators Grant
future industry-specific emergency assistance programs.
(Recommendation 1)
The Associate Administrator of SBA’s Office of Disaster Assistance
should ensure that its post-award monitoring procedures for the Shuttered
Venue Operators Grant program specifically address the risks the agency
has assessed, including fraud risks, and clearly link them to monitoring
activities. As a part of this effort, SBA should document its tolerance for
the risks it has identified. (Recommendation 2)
We provided a draft of this report to SBA for review and comment. In
Agency Comments written comments, which are summarized below and reproduced in
and Our Evaluation appendix IV, SBA partially agreed with both of our recommendations.
SBA also provided technical comments, which we reviewed and
incorporated as appropriate.
SBA partially agreed with our first recommendation to develop a more
comprehensive strategy for communicating with applicants of future
emergency assistance programs. In its response, SBA said it plans to
incorporate lessons learned into future iterations of communications plans
to ensure a more comprehensive approach to new emergency assistance
programs. SBA listed several best practices for communication it
identified, including email outreach to applicants addressing updated
guidance and monthly webinars highlighting program updates. We
believe this is a step in the right direction that would benefit applicants of
future emergency assistance programs. We urge SBA to continue to build
on the practices it identified and draw lessons from program stakeholders
and participants. For instance, we identified challenges with program
communication through our survey of applicants and discussions with
trade groups. SBA could use similar methods to inform their
communication strategy.
In addition, SBA’s response discusses bringing the issue of barriers to
addressing applicants’ specific questions before the Office of
Management and Budget for clarification in its Uniform Guidance for
grants administration. It stated that codifying additional flexibility for
communications in disaster-assistance grants and other urgent areas is
needed to ensure future federal efforts do not meet similar obstacles.
SBA partially agreed with our second draft recommendation to ensure
that its post-award monitoring procedures for the Shuttered Venue
program specifically address the risks the agency has identified. In its
response, SBA reiterated that it has a number of monitoring procedures
for addressing program risks more generally. In an appendix to its
comment letter, SBA provided additional information on how its
Page 38 GAO-23-105199 Shuttered Venue Operators Grant
monitoring procedures applied to each of the fraud risks it previously
identified, which may explain their partial agreement with the
recommendation. For example, SBA indicated that it does not consider
most of the fraud risks it previously identified, such as identity theft, as
continuing to apply to SVOG now that all grants have been awarded. In
its response, SBA also said it has procedures that would address the
residual impacts from some of these risks, such as continued searches of
third-party databases and public webpages to determine instances of
identity theft.
We acknowledge in our report that SBA’s controls for the application
process (pre-award controls to verify identity and eligibility) reflected
some leading practices for fraud risk management. For example, SBA
designed controls to check applicant information against third-party
databases and periodically assessed risks to the program, including fraud
risks. SBA’s post-award monitoring procedures (which were in draft form
at the time of our review) included a number of controls as well.
Although SBA noted in its response that it has post-award monitoring
procedures to address the risks it previously identified, the draft
procedures themselves do not provide this linkage. For example, as
noted in our report, the draft procedures do not describe activities to
address residual impacts for all the risks. The draft procedures also do
not specifically outline why identity theft and other risks are no longer
applicable. Furthermore, in its response, SBA did not address
documenting its tolerance for the risks it identified, as we had
recommended. We continue to believe that clearly linking SVOG
monitoring procedures back to each of the risks SBA identified and
documenting its fraud risk tolerance, will enhance the agency’s ability to
appropriately target its monitoring efforts to detect and respond to fraud.
We are sending copies of this report to the appropriate congressional
committees and the SBA Administrator. In addition, the report is available
at no charge on the GAO website at http://www.gao.gov.
Page 39 GAO-23-105199 Shuttered Venue Operators Grant
If you or your staff have any questions about this report, please contact
me at (202) 512-8678 or shearw@gao.gov. Contact point for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made key contributions to this report
are listed in appendix V.
William B. Shear
Director, Financial Markets and Community Investment
Page 40 GAO-23-105199 Shuttered Venue Operators Grant
List of Committees
The Honorable Patrick Leahy
Chairman
The Honorable Richard Shelby
Vice Chairman
Committee on Appropriations
United States Senate
The Honorable Ron Wyden
Chairman
The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate
The Honorable Patty Murray
Chairwoman
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Gary C. Peters
Chairman
The Honorable Rob Portman
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Benjamin Cardin
Chair
The Honorable Rand Paul
Ranking Member
Committee on Small Business and Entrepreneurship
United States Senate
The Honorable Rosa L. DeLauro
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives
Page 41 GAO-23-105199 Shuttered Venue Operators Grant
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Cathy McMorris Rodgers
Republican Leader
Committee on Energy and Commerce
House of Representatives
The Honorable Bennie G. Thompson
Chairman
The Honorable John Katko
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives
The Honorable Nydia M. Velázquez
Chairwoman
The Honorable Blaine Luetkemeyer
Ranking Member
Committee on Small Business
House of Representatives
The Honorable Richard E. Neal
Chairman
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives
Page 42 GAO-23-105199 Shuttered Venue Operators Grant
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
This report examines (1) how applicants viewed Shuttered Venue
Operators Grant (SVOG) communications and the application process;
(2) characteristics of SVOG applicants and recipients; (3) steps the Small
Business Administration (SBA) took to identify ineligible and fraudulent
applications and manage fraud risks, and the extent to which SBA’s
control activities reflect selected leading practices; and (4) how SBA
measures SVOG program performance.
Survey. For our first objective, we administered a web-based survey to a
Applicant Views on generalizable sample of SVOG applicants. In the survey, we asked
SVOG applicants about their preparedness to apply for the program, experience
completing and submitting their application, experience with program
Communications and customer service providers, and post-award requirements. We
Application Process administered the survey from February 2022 to April 2022, and we
collected information for the 16-month period from January 2021 to April
2022.
To identify the universe of SVOG applicants, we used SVOG application
data as of December 31, 2021, provided by SBA, which contained 17,644
applicants. We identified 114 applicants for which a final decision had not
been made or the application status was not defined, seven SBA test
applications, and 309 applicants SBA flagged as potential fraud. We
chose to remove these 430 applicants from the sample frame so that our
survey only would include those applicants who had received at least an
initial decision on their application. The final sample frame consisted of
17,214 unique applicants.
Sampling and response weighting. We selected a generalizable,
stratified random sample of 998 applicants. We stratified the population of
applicants into eight mutually exclusive strata by decision status
(approved for initial grant only, approved for initial and supplemental
grants, initial grant and appeal denied, and initial grant denied with no
appeal), and business size (small—up to 50 employees, and large—51 or
more employees).
We computed sample sizes necessary to obtain a precision of at least
plus or minus 10 percentage points, at the 95 percent confidence level,
for each of four decision status subpopulations of interest: (1) approved
for initial grant only, (2) approved for initial and supplemental grants, (3)
initial grant and appeal denied, and (4) initial grant denied with no appeal.
These sample sizes are expected to result in overall precision of at least
plus or minus 5 percentage points. Finally, we inflated sample sizes within
each stratum for an expected response rate of 50 percent and expected
skip-pattern participation rate of 75 percent (25 percent skips).
Page 43 GAO-23-105199 Shuttered Venue Operators Grant
Appendix I: Objectives, Scope, and
Methodology
We received valid and complete responses from 504 applicants. The 504
responses represent a 50.5 percent unweighted response rate. The
weighted response rate, which controls for the disproportionate sample
design, was 60.2 percent. We conducted an analysis of our survey results
to identify potential sources of nonresponse bias using two methods.
First, we examined the response propensity of the sampled applicants by
several demographic characteristics. These characteristics included
decision status, business size, proposed grant award amount, agency
type, region, venue type and likely grant experience (based on venue
type). We conducted bivariate logistic regression analyses to test for
statistically significant differences in response propensities for these
demographic variables.
Our second method consisted of comparing weighted estimates from
respondents and nonrespondents of population distributions to known
population distributions for the demographic characteristics. We
conducted statistical tests of differences, at the 95 percent confidence
level, between estimates and known population values, and between
respondents and nonrespondents.
Based on this analysis, we observed significant differences in response
propensities for some of the characteristics we examined. Specifically, we
found that denied applicants, business applicants, live venue operators or
promotors, and entity types likely to have less experience with grants
were all significantly underrepresented by our respondents. We found
significant differences, at the 95 percent confidence level, between
weighted estimates from the respondents when compared to known
population values for agency type. Specifically, businesses were under-
represented, while nonprofits were over-represented.
To ensure that the survey results appropriately represented the
population of applicants, we calculated weights to adjust for the
differential response propensities we observed. Specifically, we weighted
the results from the 504 respondents by the inverse of the probability of
selection (base weight) and a nonresponse adjustment factor to account
for nonresponse and the differences in response propensities we
identified. The nonresponse adjustment factor was calculated using a
propensity-based weighting class adjustment where adjustment cells
were based on quintiles of the predicted response propensities estimated
by a logistic regression model. The model included decision status,
proposed grant award amount, agency type, venue type, and an
interaction between decision status and proposed grant award amount.
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Appendix I: Objectives, Scope, and
Methodology
We applied the propensity weighting class adjustments to adjust the
sampling weights to account for potential bias due to nonresponse. To
compute the final adjusted sampling weight, we applied a simple raking
procedure to ensure adjusted weights summed to the number of
applicants in the population and by stratum.
Interviews and documents reviewed. In addition, we interviewed
representatives from six industry associations representing SVOG-eligible
businesses to obtain their perspectives on SBA’s implementation of the
program and their members’ experiences with the application process.
We selected national organizations that met all of the following criteria: (1)
represented at least one SVOG-eligible business type and small
businesses, (2) had publicly commented on SVOG or had SVOG-specific
research initiatives, and (3) had dedicated efforts to assist members in
navigating COVID-19 economic effects.
Based on these criteria, the industry associations we selected to interview
were the Broadway League, Association of Performing Arts
Professionals, National Association of Theater Operators, and American
Alliance of Museums. For our interview with the American Alliance of
Museums, representatives from two other museum industry associations
participated and offered their perspectives, for a total of six industry
associations. Collectively, the industry associations we interviewed
represent members from all six SVOG-eligible business types. These
interviews are not generalizable to other associations but offer important
perspectives.
We also reviewed SBA documentation and interviewed agency officials.
Specifically, we reviewed SVOG implementation plans, application
guidance documents, program information session materials, and
communication procedure and planning documents. We analyzed
changes to program guidance over time. In addition, we reviewed SBA’s
Strategic Plan for Fiscal Years 2022─2026.
For our second objective, we used SVOG application data as of
Characteristics of December 31, 2021, that SBA provided. These were the most recent
SVOG Applicants and grant-level data available at the time of our analysis. As described
previously, the dataset contained 17,644 applicants. To be able to
Recipients describe applicant characteristics, we chose to include the 114 applicants
for which a final decision had not been made or the application status was
not defined in our analysis. We still excluded the seven SBA test
applications and 309 applicants SBA flagged as potential fraud. Thus, the
number of applications included in our analysis was 17,328. Using these
data, we analyzed information on approval rates, award amounts, and
share of awards by business size (based on the number of employees);
Page 45 GAO-23-105199 Shuttered Venue Operators Grant
Appendix I: Objectives, Scope, and
Methodology
type (based on SVOG eligibility categories); and location (state or
territory). We also used the results of our survey to estimate the number
of applicants who appealed their award decision.
We assessed the reliability of SBA’s SVOG application data by reviewing
related documentation, testing to check for missing data, outliers, and
errors, and interviewing agency officials. We determined these data were
sufficiently reliable for describing applicant and recipient characteristics,
such as business size, type, and location.
Regression models. Additionally, we developed multivariate regression
models to help explain differences in approval rates among states. For
example, we used the logistic regression models to examine whether
states with higher applicant approval rates also tended to have applicants
that were more likely to be approved based on certain characteristics,
such as type of business.
To examine the associations between approved applicants, states, and
demographic characteristics, we first examined the variation of SVOG
approval rates by state via binary logistic regressions, Poisson
regressions, and negative binomial regressions. Second, we determined
if characteristics associated with higher approval rates differed between
states with high and low approval rates via binary logistic regression. We
created several statistical models utilizing data from SVOG program
applicants to determine if there was any variation in SVOG application
approvals by state. Additionally, we examined other demographics and
their potential associations with approved applicants.
To analyze the data, several variables were transformed. The approval
variable was dichotomized from three categories (declined, pending, and
approved) into two categories (declined or pending, and approved). State
approval rates were dichotomized into higher-approval rate states and
lower-approval rate states. The minimum cut point for high approval rates
was set at 75 percent.
In all models, the account type variable for business was collapsed from
three categories (majority tribal-owned, majority government-owned, and
nonprofit) to nonprofit or other. Size was transformed into an ordinal
variable with six categories: 10 or fewer [employees], 11–50, 51–100,
101–500, 501–990, and 1,000 or more. Age was transformed into an
ordinal variable with the categories 0–8 years, 9–20 years, and more than
20 years. Finally, the variable measure that contains the amount of
money each venue initially requested was categorized into eight ordinal
levels; [requested] up to $50,000, $50,000–$100,000, $100,001–
$200,000, $200,001–$300,000, $300,001–$500,000, $500,001–
Page 46 GAO-23-105199 Shuttered Venue Operators Grant
Appendix I: Objectives, Scope, and
Methodology
$900,000, $900,001–$2,000,000, and $2,000,001 or more. Other
variables explored in the models include state and account venue.
For the multivariate regression analyses, we determined the data were
sufficiently reliable for identifying whether certain characteristics were
associated with a higher approval rates for an SVOG award, but the
distribution of these characteristics within states did not fully account for
the higher or lower approval rates observed.
Analysis of census data. To estimate the proportion of eligible
businesses that received SVOG awards, both nationally and by state and
territory, we analyzed census data. Using the Census Bureau’s 2019
County Business Patterns dataset, which provides data by geography,
industry, and employment size, we estimated the population of potentially
eligible arts and entertainment businesses. Industry classification for the
census dataset is based on 2017 North American Industry Classification
System (NAICS) codes, which include nearly 1,200 industries.
We identified the following NAICS codes that align with the seven types of
businesses eligible for the SVOG program: Performing Arts Companies
(7111); Promoters of Performing Arts, Sports, and Similar Events (7113);
Agents and Managers for Artists, Athletes, Entertainers, and Other Public
Figures (7114); Museums, Historical Sites, and Similar Institutions (7121);
and Motion Picture Theaters (512131). These data do not align with all
the eligibility criteria for SVOG recipients—such as revenue loss
requirements—so our analysis may overestimate the size of the eligible
population. Nonetheless, the census data provides reasonable estimates
for comparing eligible business populations at the state level. We were
not able to develop an estimate for U.S. territories because data were not
available for these geographies.
We assessed the reliability of the census data by reviewing information
from the Census Bureau’s website on the procedures and methods it
used to collect the County Business Patterns data and conducted
electronic testing of the variables we used in our analysis. We determined
the data were sufficiently reliable to estimate the number of eligible
businesses per state.
For the third objective, we reviewed SBA documentation on internal
SBA’s Control control procedures and interviewed agency officials. For example, we
Activities, Including reviewed SBA guidance on what application reviewers are to assess to
verify an applicant’s identity, financial information, and eligibility before
for Fraud making an award. In addition, we reviewed program risk assessments,
procedures for conducting fraud reviews and referring applications with
potential fraud issues to SBA’s Office of Inspector General, and plans to
Page 47 GAO-23-105199 Shuttered Venue Operators Grant
Appendix I: Objectives, Scope, and
Methodology
monitor SVOG grantees for potential fraud and improper payment issues.
We also reviewed SVOG data on potentially fraudulent applications,
including referrals to the Office of Inspector General. In addition, we
reviewed SBA Office of Inspector General reports on SVOG
implementation and controls and interviewed OIG officials.
Comparison to fraud framework. We compared SBA’s policies and
procedures related to managing fraud risks against federal internal control
standards and leading practices in GAO’s Fraud Risk Framework. 1
Specifically, we compared SBA’s control activities to elements of the third
component of the framework (Design and Implement a Strategy with
Specific Control Activities to Mitigate Assessed Fraud Risks and
Collaborate to Help Ensure Effective Implementation) as part of our
review of pre-award controls for the SVOG program. We focused on this
component because it was the most relevant to our review of SBA’s pre-
award controls. We previously highlighted SBA’s activities related to the
first two components of the framework for related programs, and some of
those activities would apply to SVOG as well. 2
Covert and other testing. To identify potential weaknesses in SBA’s
control processes, we covertly tested those controls by submitting
fraudulent and ineligible SVOG applications using three fictitious
businesses. To support our applications and appear eligible for SVOG,
we submitted falsified documents such as business licenses, tax forms,
and income statements. We designed our applications to test three sets
of controls relating to smaller and larger award sizes and eligibility criteria:
• A fraudulent business, with revenue losses that supported a grant
amount under $500,000.
• A fraudulent business, with revenue losses that supported a grant
amount over $500,000.
• A fraudulent business that did not meet certain business type-specific
eligibility criteria.
After SBA declined to award our fictitious businesses, we appealed these
decisions and provided additional falsified documentation to support our
appeals. We contacted SBA’s customer support services multiple times
1GAO, Standards for Internal Control in the Federal Government, GAO-14-704G
(Washington. D.C.: Sept. 10, 2014); and A Framework for Managing Fraud Risk in Federal
Programs, GAO-15-593SP (Washington, D.C.: July 28, 2015).
2GAO, Emergency Relief Funds: Significant Improvements Are Needed to Ensure
Transparency and Accountability for COVID-19 and Beyond, GAO-22-105715
(Washington, D.C.: Mar. 17, 2022).
Page 48 GAO-23-105199 Shuttered Venue Operators Grant
Appendix I: Objectives, Scope, and
Methodology
for each fictitious business in an attempt to get support for our
applications.
We also analyzed SVOG application data as of December 31, 2021, to
identify potential control weaknesses. In particular, we analyzed the data
to identify applicants with potentially invalid or ineligible business
identification, such as having DUNS identifiers without the required
number of digits. 3 We also compared the SVOG applicant data against
the U.S. Postal Service’s Address Matching System to identify potentially
invalid address information provided by applicants. 4
In addition, we compared the SVOG application data with datasets for
other pandemic relief programs to determine whether implementation of
SVOG was consistent with program requirements. We compared SVOG
recipient data with a limited sample of recipient data for the Paycheck
Protection Program (PPP) as of December 31, 2021, to determine
whether PPP loans were deducted from SVOG awards per program
requirements. 5
For our fourth objective, we reviewed SBA’s SVOG logic model (which
SVOG Performance includes measures to assess the program’s outputs and outcomes) and
Measurement the fiscal year 2023 Congressional Budget Justification (which includes
performance targets and measures for the program). We also interviewed
officials from SBA’s Office of Disaster Assistance and Office of Inspector
General.
3SVOG program applicants were required to register with Dun & Bradstreet and obtain a
DUNS number—a unique nine-digit identifier used to verify a business’ identity. In addition
to analyzing which applicants had DUNS without the required number of digits, we looked
at other outlier characteristics, such as having DUNS numbers with all digits having the
same value (for instance, all zeros), and applicants with prefixes for their employer
identification numbers indicating that their businesses may have been formed around the
creation of the SVOG program.
4The Postal Service’s programming interface enables users to validate addresses.
5We matched identifiers for SVOG applicants that had a single employer identification
number in both the SVOG and PPP datasets (SVOG data were as of December 31, 2021
and PPP data were as of June 30, 2021—the end of the PPP program). This totaled 5,334
SVOG and PPP recipients out of 7,625 SVOG applicants that participated in PPP.
Although SVOG applicants were eligible to apply for a PPP loan, SVOG recipients could
not apply for PPP after receiving an SVOG award. Additionally, if an SVOG award
recipient also had received a PPP loan after December 27, 2020, the PPP loan amount
had to be deducted from the recipients’ approved SVOG grant award. We compared the
potential grant amount with actual grant amount to see if the difference equaled the PPP
loan amount. According to SBA, application reviewers adjusted some SVOG award
amounts upward after reviewing applicant revenue and other information. Because these
adjustments are not identifiable in our data, we could not differentiate cases in which
these adjustments were made from cases in which PPP loan amounts were not deducted.
Page 49 GAO-23-105199 Shuttered Venue Operators Grant
Appendix I: Objectives, Scope, and
Methodology
We conducted this performance audit from April 2021 to October 2022 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives. We conducted our related
investigative work in accordance with standards prescribed by the Council
of the Inspectors General on Integrity and Efficiency.
Page 50 GAO-23-105199 Shuttered Venue Operators Grant
Appendix II: Application Processing Times
Appendix II: Application Processing Times for
the Shuttered Venue Operators Grant Program
for the Shuttered Venue Operators Grant
Program
The Small Business Administration (SBA) significantly increased
processing rates for Shuttered Venue Operators Grants (SVOG)
applications after revising some of its review procedures. After the first 6
weeks of the program, SBA had made decisions on less than 1 percent of
applications received (90 of 14,013). In June 2021, SBA changed its
process for reviewing applications to make funding decisions more
quickly (see app. III for more information on the changes). The number of
applications processed increased significantly from mid-June to mid-July
2021 (see fig. 7). SBA reported issuing decisions for 10,019 applications
(66 percent of applications submitted) by July 19, 2021.
Figure 7: Status of Shuttered Venue Operators Grant Initial Award Applications, April 26, 2021–February 7, 2022
Processing rates slowed after mid-July. According to SBA officials, its rate
slowed because the agency had processed the straightforward
applications first, and the remaining, more complex applications required
additional time for review.
New applications averaged less than 500 per week in August and SBA
closed the portal to new applicants on August 20, 2021. On August 23,
Page 51 GAO-23-105199 Shuttered Venue Operators Grant
Appendix II: Application Processing Times for
the Shuttered Venue Operators Grant Program
2021, SBA reported about 13 percent of applications (2,344) remained to
be processed and reported completing them on February 7, 2022.
As of December 31, 2021, SBA averaged 65 days to process an
application from receipt through award decision (see fig. 8). About 13
percent of applications took over 90 days. The shortest processing time
was under a day and the longest was 247 days.
Figure 8: Application Processing Time for Shuttered Venue Operators Grant, as of
December 31, 2021
Note: Chart does not sum to 100 percent because of rounding.
Page 52 GAO-23-105199 Shuttered Venue Operators Grant
Appendix III: Key Changes to Pre-Award
Appendix III: Key Changes to Pre-Award
Controls for the Shuttered Venue Operators
Grant Program
Controls for the Shuttered Venue Operators
Grant Program
Table 15 describes key changes the Small Business Administration (SBA)
made to its pre-award controls for the Shuttered Venue Operators Grant
Program starting on June 11, 2021. The changes were designed to
expedite application processing times. Prior to making these changes,
SBA had made decisions on less than 1 percent of applications received
(90 of 14,013). (See app. II for more information).
Table 15: Key Changes to Pre-Award Controls for the Shuttered Venue Operators Grant Program, June 2021
Control activity prior to June 2021 Change to control activity in Small Business Administration (SBA) reasons for
June 2021 change, according to agency officials
Automatic checks of applicant tax Removed these checks for grant SBA already required all applicants to provide tax
information against Internal Revenue awards below a certain dollar information that would help SBA verify their identity and
Service (IRS) data (information threshold to instead rely on finances, so it determined that requiring this check for all
provided using IRS Form 4506-T). applicant-provided tax applications was not necessary.
information. This approach aligned with other SBA programs.
The threshold set for conducting IRS checks was intended
to limit the added risk from removing this control to about
10 percent of the funds.
Automatic legal reviews for certain Removed automatic legal reviews SBA determined that its experience assessing the eligibility
businesses (e.g., talent and reserved complex reviews for of each business type, including more complex businesses,
representatives) that SBA novel cases. made automatic legal reviews unnecessary.
determined were “inherently Only novel cases in which it was difficult for reviewers to
complex” (eligibility more difficult to verify the principal business activity would receive a legal
verify through government sources). review—such as jousting tournaments or laser light shows.
Investigations of applicants to Removed investigations to SBA considered the costs and benefits of removing
identify affiliates. instead rely on applicant automatic investigations for affiliate status. SBA determined
attestations. that it no longer needed to spend staff time on
investigations into affiliate status.
Use of different business identifiers Used employee identification SBA adopted the new approach to reduce the number of
to match applicant information numbers to match applicant false positives.
against the Department of the information, according to SBA
Treasury’s Do Not Pay List to officials.
identify potentially ineligible
businesses, according to SBA
officials.
Use of multiple disbursements, Changed to a one-time The Office of the Administrator directed the Shuttered
which provided opportunities for SBA disbursement for all grants. Venue program to align its disbursement schedule with
to withhold a portion of the award in SBA’s other pandemic relief programs—Restaurant
the future if recipients were found to Revitalization Fund, Economic Injury Disaster Loan, and
be fraudulent or ineligible. Paycheck Protection Program.
Source: GAO analysis of SBA documentation and officials’ statements. | GAO-23-105199
Page 53 GAO-23-105199 Shuttered Venue Operators Grant
Appendix IV: Comments from the Small
Appendix IV: Comments from the Small
Business Administration
Business Administration
Page 54 GAO-23-105199 Shuttered Venue Operators Grant
Appendix IV: Comments from the Small
Business Administration
Page 55 GAO-23-105199 Shuttered Venue Operators Grant
Appendix IV: Comments from the Small
Business Administration
Page 56 GAO-23-105199 Shuttered Venue Operators Grant
Appendix IV: Comments from the Small
Business Administration
Page 57 GAO-23-105199 Shuttered Venue Operators Grant
Appendix V: GAO Contact and Staff
Appendix V: GAO Contact and Staff
Acknowledgements
Acknowledgements
William B. Shear, (202) 512-8678 or ShearW@gao.gov
GAO Contact
In addition to the contact name above, Lisa Moore (Assistant Director),
Staff Davis Judson (Analyst in Charge), Meghana Acharya, Jim Ashley, Irina
Acknowledgments Carnevale, Chelsea Carter, Denise Cook, Ranya Elias, Daniel Flavin,
Toni Gillich, Rob Graves, Jill Lacey, Nick Lessard Chaudoin, Ying Long,
Lydie Loth, John McGrail, Maria McMullen, Colleen Moffatt Kimer, Afsana
Oreen, Barbara Roesmann, Jena Sinkfield, and Monique Williams made
key contributions to this report.
(105199)
Page 58 GAO-23-105199 Shuttered Venue Operators Grant
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