SBA Investigating $1.5 Billion From Reside Leisure Bailout

The Small Enterprise Administration continues to be monitoring down $1.5 billion in federal funds that it spent to maintain the reside leisure business afloat through the pandemic — two years after it was supposed to shut out this system.

The SBA inspector-general mentioned in a brand new report that by June 2023 the company was alleged to have made “each effort” to shut out the Shuttered Venue Operators Grant, which doled out cash to hundreds of music venues, film theaters, and different leisure companies.

As of Could 2025, nonetheless, 1,080 grants have been nonetheless open, which means the company hadn’t accounted for the way these funds have been used. About two-thirds of these grantees hadn’t submitted audits or responded to questions on the usage of funds, the report mentioned.

Enterprise Insider revealed final 12 months that not less than $200 million from this system went to profitable musicians, a few of whom used the cash for high-end resorts, non-public jets, and self-enrichment.

By fall 2024, the SBA had recognized $544 million in “probably improper” funds that have been alleged to be clawed again from a whole bunch of recipients, a few of whom it decided have been by no means alleged to get a grant within the first place.

The SBA started transferring earlier this summer season to claw again a whole bunch of grants. Meredith Lynsey Schade, a theatrical producer who advocated for grantees, mentioned this system has typically been successful, however some grantees have been being pursued for clawbacks over points with paperwork. “These recoupment letters aren’t essentially about fraud,” she mentioned in an e mail.

It isn’t clear whether or not any celebrities are amongst these whose grants are being clawed again. SBA emails that Enterprise Insider obtained through a public info request final 12 months mentioned that about 70% of the grants spotlighted in BI reporting had already been closed out.

Michael Strickland, who runs a lighting firm and advocated for this system, mentioned he is been contacted by “a whole bunch” of people that obtained clawback letters in latest months.

“I’ve had managers, I’ve had brokers, I’ve had venue house owners, I’ve had manufacturing individuals, producers of reveals,” he mentioned. “There is no single continuity to the principles they’re being accused of tripping.”

The SBA has struggled to discover a technique to get well the cash, the company’s inner watchdog mentioned in its report.

“Because of not referring improper funds to the Treasury and never sending demand letters, there’s an elevated threat that the federal government won’t be able to gather improperly paid SVOG funds.”

Sen. Joni Ernst, an Iowa Republican who leads the Senate’s small enterprise committee, mentioned individuals who misused funds from this system must be held accountable. She is backing a invoice that might give prosecutors an additional 5 years to carry prices in circumstances of SVOG fraud.

“The Biden administration made nearly no effort to get well greater than $500 million in improper funds dispersed by means of the Shuttered Venue Operators Grant program,” she mentioned in an announcement.