This is part 3 of a three-part series to help beauty businesses navigate the CARES act and its benefits for the beauty industry including unemployment, individual stimulus checks, the Payroll Protection Program and Economic Injury Disaster Loans.
Note: These programs are very new. Some details seem to change slightly day-to-day as the programs are implemented. I will be keeping this series up-to-date as new information becomes available.
- Part 1 overviews the CARES Act and how it applies to salons
- Part 2 covers the Paycheck Protection Program with "Loan Forgiveness"
If you’ve already applied:
- EIDL Change Announcements
- How can I check the status of my application?
- How do I create an SBA login account?
- How to I log in to my SBA account?
- Do I need to re-apply?
If you haven’t applied yet:
- What is EIDL?
- How does the EIDL grant work?
- Can I apply for the grant only?
- What's the difference between EIDL and PPP?
- Who's eligible to apply?
- Will I get the grant?
- Will I get the loan?
- Does EIDL offer "Loan Forgiveness"?
- How do I apply?
- Can I apply to both EIDL and PPP?
- Risks to consider before accepting a loan
- Where can I ask questions EIDL?
EIDL Change Announcements
The SBA has released a bulletin that announces that EIDL Loan advances will start to be distributed this week. $1000 per employee up to $10,000 max.
How can I check the status of my application?
If you don’t already have an SBA account you can create one. Applicants with accounts are able to view updates, messages, applications completed, issues found, requests for the applicant to reapply with reason code.
How do I create an SBA login account?
How do I log in to my SBA account?
Do I need to re-apply?
Listed here are cases where you will want to create an SBA account and re-apply using the latest streamlined application.
The SBA ensures that reapplying will not lose your place in the queue with your original EIDL loan application.
- If you applied before March 31, 2020, create an account and reapply.
- If you did not receive an email confirmation and you don’t have an SBA account, create an account, and then reapply.
- If you forgot to check the box to receive your advance? Create an account and reapply to make sure you checked the checkbox.
- If your application number starts with 2000 you were not offered the checkbox to receive the advance. Create an account and reapply.
- If you applied and uploaded all your documents but now it reports your documents are not found? Create an account and reapply.
- You're able to log in, you see your application number 2000, you see your 3300 application number as well, and you see a notice that your self-certificate needs to be updated. Log in and reapply.
- You log in to your SBA portal, you see your 2000 application but you also completed your Streamline application and checked the advance box but your 3300+ number is not listed. Log in and reapply.
- You do not have any applications listed when you login and you called the call center and the rep told you to wait 10+ days for an email. Log in and reapply.
What is EIDL?
The Economic Injury Disaster Loan is a program offered by the Small Business Association and has recently been expanded upon by the CARES act. The EIDL offers several fantastic benefits, the most unique of which is access emergency grants OF $1,000 per employee, up to $10,000.
How does the EIDL grant work?
The EIDL application is a single application that allows applicants to apply for both a loan and for a grant at the same time.
The application allows applicants to opt-in to be considered for the emergency grant. Whether or not you are approved for the loan, you will be considered for the grant.
The emergency grant is supposed to be available to you 3 days after applying, whether or not you're approved for the loan.
There's no obligation to accept the loan if you've been approved. The grant does not have to be repaid under any circumstance. Even if the application for the loan is denied, or you decide not to accept it.
If you're approved and decide to accept the loan, you should receive the grant 3 days after applying and the grant amount will be subtracted from your total loan amount.
Emergency grant funds can be used to pay for employees, rent, mortgages, materials, sick leave, and other business obligations that can't be met due to loss of revenue.
Can I apply for just the grant?
No. By filling out the application you are applying for both simultaneously. You cannot apply for the grant by itself.
What's the difference between EIDL and PPP?
Both are helpful loan programs with different benefits:
Who's eligible to apply?
Sole proprietors, independent contractors, corporations, cooperatives, ESOPs, and tribal businesses with fewer than 500 employees per location and all non-profit organizations. As far as I can tell, that's full coverage of all salons and booth renters in the US.
Will I get the grant?
The bill doesn't specify grant approval criteria. It seems to say that anyone who is eligible to apply is eligible to receive a grant.
Lastly, it's not clear if the budget gets dispersed on a first-come-first-serve basis or if the SBA will develop internal approval criteria and only allocate grants to approved applicants.
Will I get the loan?
Credit score seems to be the primary criteria, however, it's not clear what credit score ranges will be accepted or denied. Gross income and Cost of Goods Sold may also be considered as secondary metrics to help determine your ability to pay back the loan.
Does EIDL offer loan forgiveness?
EIDL does not offer loan forgiveness the way PPP loans do. Compared to PPP the EIDL loans have a more standard payback structure.
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How do I apply?
The SBA has published an online “Streamlined Application” that you can find at https://covid19relief.sba.gov
Can I apply for EIDL and PPP?
You can apply for an EIDL loan now and the PPP loan when it becomes available, as early as April 3. However, SBA loans are limited to one per Taxpayer ID number at a time.
If you want to apply for both you have two options:
- If you apply for, qualify for, and accept the EIDL loan, then at a later time you qualify for the PPP loan, you can refinance the EIDL loan with the PPP loan.
- If you apply for both and are approved for both, you can choose which one works best for your particular situation.
Where can I ask questions about the loans?
Talk to your CPA or speak with the SBA directly. You can find a nearby Small Business Development Center or Women’s Business Center here. Salon owners are discussing EIDL loans and grants here on our Facebook Group. Join the discussion and ask questions.
Risks to consider before accepting a loan
Taking on debt can be a great way to temporarily free up cash flow - but be cautious. The last thing you want to do is take out a loan to pay for a month or two of expenses to find yourself in the same boat after 3 months. A loan is a short-term tool to ensure the long-term viability of your business. Make sure to plan accordingly before taking on debt.
A line of credit is often a safer strategy than a loan. This is because you only pay back what you draw from the line. Generally speaking, don't use loans or lines of credit to purchase consumer goods. Retain those resources for larger business expenses.
Always talk to your accountant, financial planner, mentors, and experts before deciding to accept a loan.
Both the EIDL and PPP programs are both unique options for small businesses. EIDL is potentially interesting considering the emergency grant access. The PPP is particularly interesting because of the loan forgiveness aspect.