Industry • COVID-19
Feb.15,2021By Boulevard Staff
Many beauty professionals are struggling after almost a year of outbreaks and lockdowns. The good news is that as a small business owner — even if you’re a sole proprietor — there are resources to keep your operation afloat. The most important is the Paycheck Protection Program, which offers 100% forgivable loans.
Here’s everything you should know:
The Paycheck Protection Program, or PPP, is a service that offers forgivable loans to small businesses so they can continue to pay their employees. These loans are eligible to be repaid in full as part of the trillions in government funding dedicated to COVID-19 economic relief. The United States federal government authorizes PPP funding as a resource to help eligible candidates reopen and continue paying their employees during the various challenges of COVID-19.
The US Small Business Administration (SBA) orchestrates PPP loans by pairing business owners with authorized lenders. As of writing, lenders have distributed $623 billion through a cumulative six million loans. Naturally, salons and spas that classify as small businesses are eligible for the program.
As with any small business owner, beauty professionals are eligible for a First Draw PPP loan if they are one of the following:
Sole proprietors, independent contractors, and self-employed persons
Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard)
Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of: 500 employees or that meets the SBA industry size standard if more than 500.
Any business with a NAICS code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location.
If your salon or spa already received a First Draw PPP loan, it may be eligible for a Second Draw if it:
Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses
Has no more than 300 employees; and
Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Beauty professionals can obtain PPP funds by applying through the SBA website. After filling out a brief questionnaire, the SBA matches applicants with potential lenders to review rates, terms, fees, and other essential data. Lenders will communicate with beauty professionals by email during this process.
Once your PPP loan clears, your salon or spa might be eligible to remove the debt entirely. Any small business can apply for loan forgiveness if it spends loan proceeds in full, but there are some fine print exceptions to keep in mind:
Your business must maintain all employee and compensation levels; in other words, there can be no furloughs or pay cuts for your stylists and assistants
All loan proceeds must go towards payroll costs and eligible expenses as noted in your terms
At least 60% of loan proceeds must go towards payroll.
One thing to note is that beauty professionals looking for loan forgiveness must apply within ten months of the last loan coverage date. Doing so will freeze repayments until federal funding is processed. If you do not, payments will begin to arrive with interest.
Supporting a business during a pandemic is no easy feat, especially one with specific needs like the beauty industry. Thankfully, resources like the PPP can help beauty professionals make ends meet. For more information, please visit the SBA frequently asked questions page.
Additionally, if you are looking for other ways to help support your business and tackle challenges, Boulevard can be a valuable resource. Feel free to reach out to our team so we can discuss the different ways in which we can help with your specific needs.