Money Matters: While PPP Has Been Vital, The Live Industry Banks On More Financial Help

Most live music businesses are well aware by now of the Small Business Administration’s Paycheck Protection Plan (PPP loans), which aims to help keep

AP Photo / Evan Vucci
Small Business Administration head Jovita Carranza speaks during the signing of a coronavirus aid package to direct funds to small businesses, hospitals and testing, at the White House April 24. The Paycheck Protection Program has been instrumental in keeping the live industry afloat over the last few months.

employees on the payroll during the coronavirus shutdown. 

The 1% interest loans include an eight-week grace period – which may soon be extended to 24 weeks – but can be forgiven altogether if certain conditions are met, namely, if the business uses the majority of the funds for payroll expenses.
This lifeline, with an average loan amount of $115,533 and more than $511 billion serviced so far across the country, has proven vital to an industry largely shut down by COVID-19 for the last three months.
“I’ve got clients that make $20 million a year, all of a sudden their main revenue stream, live events, is down to zero so their revenue is down to zero,” says Bryan Bolton, SVP at First Horizon Bank’s Music Industry Group, based in Nashville. “They’re struggling to find revenue streams from other sources. Something had to be done. This PPP in my opinion was a great program and it’s awesome that our government stepped up and did that.  However, it is kind of a quick fix or Band-Aid as this thing has gone on for so long. We have to get the economy back open before these companies can flourish again.”

Bolton says First Horizon has serviced more than 13,000 PPP loans totaling more than $2 billion, while the Music Industry division has done more than 300 PPP loans totaling $40 million, with clients including  festival owner/operators, touring artists and some music writers.
“Small” business is relative, too, with the loosest definition being any business with fewer than 500 employees. From there it gets complicated, as companies with more than 500 employees are still eligible if they satisfy the definition of a “small business concern” under the terms of the Small Business Act based on revenue and employee size corresponding to its particular industry. This led to some public blowback when companies like Shake Shack and Potbelly Sandwich Shops managed to secure PPP loans – although those have been returned.
Another complication and concern for many in the live sector is that venues and production  companies can’t keep part-time or seasonal staff on payroll when there’s literally no business to be done or physical doors to open. 
“I’ve got one client with several restaurants and they can’t use the PPP money to their employees because they can’t open their doors,” Bolton says. “We’ve advised our clients to put it in a separate account, keep really good track of it, use it for payroll and other applicable expenses, and if at the end of eight weeks there’s money left and it won’t be forgiven, you may want to just pay it back. If you don’t have any income and already used it all, we don’t know what happens yet if you default. It’s guaranteed by the government so I guess they’d have to come after the business owner.”
Figuring out if your loan is forgivable isn’t simple, either, as Bolton says the 11-page document from the SBA “made even my head hurt reading it, as a banker.” 
Although on June 4 it was announced PPP program has been modified so borrowers can extend the period to 24 weeks, and the payroll expenditure requirement has been reduced to 60%, which will help, Bolton says Main Street Lending, another Federal government program that has emerged recently, may be the better long-term solution.  Those loans have a four-year maturity, with interest and principal payments deferred for one year. Banks will retain some risk on the otherwise government-backed loans.  

Bryan Botlon
– Bryan Botlon
First Horizon Bank
In recent weeks, Bolton says he and his colleagues have been working 12- to 15-hour days to keep up with the demand for the PPP loans and handling the paperwork and regulation involved for what is far from regular business for the bank.
“The people in our company truly cared and all had the same mindset to help as many people as we can,” he says. “The more people we can help, the better the economy is, the better our job security is in the future and it’s just the right thing to do.”