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Chat Episode 1: Financial Uncertainty & Opportunity for Spas as a Result of COVID-19
Recorded Thursday, May 7 • Business Success
Evolve and sustain your spa business in the new normal. Listen in as our panelists provide insight into financial coping strategies, various aspects of the CARE Act, evolving your business model, & more!
Panelists: Juan Garcia, CPA, Hicok, Brown & Company CPAs Karen Short, CEO, Universal Companies Monte Zwang, Owner, Wellness Capital Management
Juan J. Garcia, CPA
Hicok, Brown & Company
Karen Short, CEO,
Universal Companies
Monte Zwang, Owner,
Wellness Capital Management
Additional questions asked during webinar
If you are shut down by state how can you pay employees if you are closed? You can pay payroll even if you are shut down. The PPP was developed as a substitution to unemployment so you can pay your employees to sit at home.
How long will the PPP loan be available? As of 5/7/2020 it was reported that somewhere between $60 Billion and $100 Billion is remaining of the PPP loan. This money can run out any day!
With procedures changing day by day, what's the current eligibilty for the Emergency Disaster Loan? Per SBA Website: SBA will begin accepting new Economic Injury Disaster Loan (EIDL) and EIDL Advance applications on a limited basis only to provide relief to U.S. agricultural businesses.
If a spa is purchased during the COVID shutdown, can the PPP loan be applied for? The spa would have to use the same standards set forth in the application process so it depends on how the spa was purchased. If the entity (Stock or Interest) was purchased then the applicant could use the 2019 data BUT if the assets were purchased then I suspect the amount of the loan would be zero since there was no Schedule C income from 2019 or Payroll Related Cost under the rules for loan amount determination.
If clients are given discounts on services is it still possible to pay stylists on the original value of service and apply that to the PPP? SBA nor the Department of Treasury has linked the payment for services from clients to the payment of wages/commissions/bonuses to employees for the PPP loan. Apply under the application process for determining the loan.
You mentioned "Other" part of 25% PPP Loan, does "Other" include Owner's Compensation (not wages)? I read this in some blog. Owner’s Compensation can be included in Payroll Related Costs (75%) as wages (OR as income replacement for Sole Proprietors/Schedule C Businesses/Independent Contractors). Please be advised this is limited to $15,385 for the 8 weeks period. Also be advised that Distributions are NOT included as an allowable item under the PPP for forgiveness.
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Universal Companies is proud to have a team of experienced spa advisors on staff and welcomes you to consult with our professionals about spa products and supplies, including ingredients, equipment, and retail. Dedicated to the success of spa professionals everywhere, we're grateful to be recognized with the American Spa Magazine Professional's Choice Award, Favorite Distributor of the Year for many consecutive years. (Thank you!)