Escape Room USA’s Fishers and Indianapolis locations are suing the US Small Business Administration in hopes of being recognized as live entertainment venues that qualify for pandemic relief.
After applying for the $840,000 Shuttered Venue Operators Grant (SVOG) last August, the Indianapolis and Fishers locations were denied funding and subsequently an appeal.
According to lawsuits filed Jan. 14 in the U.S. District Court for the Southern District of Indiana, The Escape Room USA argues that financial assistance was “unlawfully withheld” and that the SBA has not provided an explanation for denying the company’s applications Has.
Escape Room CEO Jennifer Harbron outlined the company’s attempt to get the SBA to reconsider its decisions in a statement provided to IBJ.
“We, like many other entertainment venues, were closed by government order during COVID and suffered the associated losses,” Harbron said. “Our application for SVOG was denied and our appeal was denied even though similar entertainment ventures have been approved and funded in the United States. We understand that the escape room concept is still new to many people, but we want to be treated equally by the SBA.”
The first escape room opened in 2015 at 200 S. Meridian St. above The Old Spaghetti Factory restaurant in downtown Indianapolis. In the escape room experience, groups of customers work together to find clues and solve puzzles to escape themed rooms in a given time.
The Fishers location at 8890 E 116th St opened in 2016. A third Indiana location opened in November at 16848 Southpark Drive in Westfield.
The SVOG Act, formerly known as Save Our Stages, was signed into law on December 27, 2020 and included more than $16 billion in aid funds to be overseen by the SBA’s Office of Disaster Assistance.
Eligible entities for grants were listed as operators or organizers of live venues, theater producers, operators of performing arts organizations, museum operators, cinema operators and talent representatives.
Applicants were allowed to apply for grants up to 45% of their gross income, with individual grants capped at a maximum of $10 million.
As of January 18, 170 scholarships have been awarded in Indiana. The top three SVOG recipients were North Park Cinemas in Evansville ($10 million); the Indianapolis Zoological Society, or Indianapolis Zoo ($9.1 million); and the Children’s Museum of Indianapolis ($8.9 million).
As Escape Room CEO Harbron indicated, not all Escape Room attractions in the United States have been excluded from SVOG funding. Three examples of successful escape room applicants: Escape Artistry, Chicago; Escape the Estate, Syracuse, NY; and Escape Space Games, Portland, Oregon.
Andrew Preble, president of Ergo, a nonprofit organization supporting escape rooms, said more than 10 escape room companies have received SVOG funding.
“There is no sense or reason as to which companies received money and which did not,” said Preble, who owns an escape room in New Orleans that has been denied funding.
Although Preble said escape rooms are not uniform in terms of theatrical flair or immersive experiences, he accuses the SBA of being inconsistent.
“It’s hard to say whether or not it’s illegal, but we definitely don’t believe that (the SBA) acted in good faith with the various types of applicants,” Preble said. “Probably the biggest problem was that they hadn’t put in place a process when reviewing applications to ensure they were consistent throughout.”
SVOG legislation requires that applicants have a defined performance and audience space, sound mixing equipment, a sound reinforcement system and a lighting system. Personnel at Eligible Entertainment Venues include one or more individuals who work in at least two of the following roles: sound engineer, talent buyer, promoter, stage manager, security guard, and box office manager.
“The way the legislation was written, we’ve supported it from the start without really making any changes to it,” Preble said. “We didn’t think escape rooms would have such a big problem when applying for the scholarship. But that was very naive.”
Escape Room USA’s lawsuit names the US Small Business Administration and its chief official, Isabella Casillas Guzman, as defendants.
When reached by the IBJ, SBA officials said the organization does not comment on individual applications for SVOG or other programs or pending litigation.
The SBA made a general comment on the SVOG program: “SBA’s SVOG team has been creative and committed to providing every funding opportunity for our nation’s small businesses, cultural institutions, venues, theaters and other entertainment providers. Some examples of our involvement include the SBA inviting over 5,000 applicants to appeal SVOG rejection decisions. Around 3,000 companies accepted this invitation.”
Top 10 Shuttered Venue Operators Grant Awards in Indiana
- $10 million, North Park Cinemas, Evansville.
- $9.1 million, Indianapolis Zoological Society.
- $8.9 million, Children’s Museum of Indianapolis.
- $8 million, Indianapolis Symphony Society (Indianapolis Symphony Orchestra).
- $7.1 million, Drum Corps International, known for marching band competitions, Indianapolis.
- $6.9 million, Bullseye Event Group, known for Indianapolis Colts VIP tailgate events and sports travel packages, Indianapolis.
- $6.1 million, Music For All, Inc., known for Bands of America Marching Band Competitions, Indianapolis.
- $5 million, Beef & Boards Dinner Theater, Indianapolis.
- $2.9 million, Fort Wayne Zoological Society (Fort Wayne Children’s Zoo).
- $2.9 million, Derby Dinner Playhouse, Clarksville.
