The US secondary ticketing sector is borrowing up to $77.5m via the Paycheck Protection Program (PPP) to remain afloat amid the COVID-19 pandemic, which has brought the live events industry to a complete standstill for four months.
In the latest report from the U.S. Small Business Administration, which implements the programme, it shows SeatGeek is claiming loans of $5-10m, while Goldstar Events is claiming $2-5m and Tix Corporation between $350,000-$1m.
Approximately 80 secondary and tertiary ticketing companies in the US have been in receipt of these loans in order to pay their employees amid the pandemic, which has decimated the industry on a major scale.
The PPP is a $669bn business loan programme established by the 2020 US Federal government Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help certain businesses, self-employed workers, sole proprietors, certain nonprofit organisations, and tribal businesses continue paying their workers.
It allows entities to apply for low-interest private loans to pay for their payroll and certain other costs. The amount of a PPP loan is approximately equal to 2.5 times the applicant’s average monthly payroll costs.
The loan proceeds may be used to cover payroll costs, rent, interest, and utilities. The loan may be partially or fully forgiven if the business keeps its employee counts and employee wages stable.
The deadline to apply for a PPP loan was initially June 30, and was later extended to August 8.
An applicant is not required to demonstrate that it cannot find credit elsewhere, but it is required to certify, in good faith, that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant”.
The firms are not required to begin to pay any principal or interest to the lender until the date that the SBA disburses the amount of loan forgiveness to the lender. If the business does not apply for loan forgiveness, then the business is not required to begin to pay principal or interest to the lender until ten months plus 24 weeks after the date the loan proceeds were disbursed to the business.
However, as industry expert Tim Chambers explains, some ticketing companies have been without any cashflow for more than four months and the pandemic creates uncertainty over when that will start up again for the industry.
While 15 months seems like a fair distance away before repayments are due, some companies may not last beyond the end of this year due to COVID-19’s events shutdown and its high potential to return.
Chambers told TheTicketingBusiness: “Until there are new onsales for new events – repayments of these loans cannot be guaranteed.
“At the moment, there are very few new large scale events to bring in money for ticketing companies and any new events are not guaranteed amid the pandemic.”