Salon Business
Learn tips, tricks and business recommendations from our top salon professionals.
02.04.2020
COVID-19 Liquidity Support for Salon Industry
COVID-19 Liquidity Support for Salon Industry
How to pay salaries when salon is closed and there is no revenue?
Submit an application for the government support program designed to protect industries affected by COVID
Apply for working capital loans guaranteed by the government where they are available or existing loan deferment.
Contact your lender immediately and see appendix A1 for an example loan deferment letter.
Put employees on reduced working hours/paid leave
In many states, flexible unemployment laws have been implemented to support workers and employers impacted by COVID-19.
Check with your state’s unemployment insurance program regarding the rules in your state.
Temporary unemployment schemes – Under new guidance, federal law permits significant flexibility for states to amend their laws to provide unemployment insurance benefits in multiple scenarios related to COVID-19.
For example, federal law allows states to pay benefits where:
An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work;
An individual is quarantined with the expectation of returning to work after the quarantine is over; and
An individual leaves employment due to a risk of exposure or infection or to care for a family member.
In addition, federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19.
NOTE: Check with your state’s unemployment insurance program regarding the rules in your state.
Terminate the employment of some staff
Review your local and state employment laws and/or consult an employment lawyer to ensure you are up to date on employment law related to terminations or layoffs.
How to pay social, pension contributions and taxes when the salon is closed and there is no revenue?
Apply for payment term extension or tax deferral
Learn more about tax deferral for the IRS here.
Check your local state tax board for more information on state taxes.
How to pay salon rent when it is closed and there is no revenue?
Request a temporary rent reduction during the closure period.
We have provided a letter template below in addendum A2.
Align payment term extension with the landlord, special payment plan.
We provided a letter template below in addendum A3.
If you are unable to agree on a special plan, consider other options:
Financial support is available from the Government’s Wage Subsidy and Leave Payment scheme is available to eligible employers and workers
Determine if your tenancy agreement allows for subletting, borders, etc.
Research options with budgeting services and other business services for other options.
Many states are implementing eviction memorandums to prevent evictions due to non-payment related to COVID-19. (Ex: Los Angeles’ mandate here.) Your local county or state website can provide more information.
How to pay supplier invoices when the salon is closed and there is no revenue?
Request support via payment term extension to partners, suppliers.
At Coty Professional Beauty, we are offering an extension on all due payments. Please contact your sales representative or customer service team for more information.
How to pay taxes when the salon is closed and there is no revenue?
Apply for payment term extension, tax deferral, or credits:
Any other tools to help salon liquidity?
Assess via your business insurance provider if pandemic like COVID-19 is covered and can help you cover losses in the transition period
RESOURCE LINKS
All states/Federal
- Find out what the US government is doing about the coronavirus
- IRS coronavirus response
- Small Business Association coronavirus loan resources.
- SBA Disaster Assistance Loans
- Department of Labor, Wage and Hour Division
- Department of Labor, Wage and Hour Division, Families First Coronavirus Response Act
- Labor and Workforce Development Agency Resources for Employers & Workers
OTHER Resources from our industry
ADDENDUMS
For letter samples below, you may find that a call is more effective. These letters can be used as talking points as well.
A2: Example letter requesting loan deferral/reduction
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To whom it may concern,
First, I hope that you healthy and well during this time. My name is <> and I am the primary on account number <>. Due to unforeseen circumstances related to the COVID-19 pandemic, I am writing to understand what options your organization has put in place for those who need to request additional payment options during this national emergency. Ideally, I would like to request a deferment of my loan for the next <>.
I have been a customer for <> and have always tried to pay my installments on-time and in full. However, due to decisions and actions beyond my control, I was met with an unexpected hardship of <>. At this time, I must focus on the most necessities and preservation.
I appreciate your understanding as our community works together to battle this novel virus. I want to continue to work together during this unprecedented time and I will continue to provide updates to you regularly. Please reach out to me if you have any questions.
Sincerely,
<>
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A2: Example letter to Landlord requesting rent reduction
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Dear: <<LANDLORD’S NAME>>
First, I hope that you and those close to you are healthy and well during this time. As you may know, due to county mandates in place in <>, our business has been closed temporarily. Therefore, my salon is unable to create income or cash flow during this time. This is an unprecedented situation that we are in together and I hope that it will be behind us quickly.
I am working very hard to protect the health and safety of my salon community, provide support to my employees, protect and preserve my business, support my employees who are unable to work, and manage creditors/bills.
In order to protect the future of our partnership, I would like to proactively discuss creative solutions for our rental payment agreement. At this time, a rent reduction will allow me to continue paying rent, while protecting important funds to keep my business afloat during the coming weeks.
This month, I am able to pay <> of our normal balance. I would like to discuss options for payment of the rest of the amount after we can return to business as normal.
I appreciate your understanding as our community works together to battle this novel virus. I want to continue to work together during this unprecedented time and I will continue to provide updates to you regularly. Please reach out to me if you have any questions.
Sincerely,
<>
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A3: Letter to landlord requesting delayed rent payments
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Dear: <<LANDLORD’S NAME>>
First, I hope that you and those close to you are healthy and well during this time. I’d like to apologize for the fact that my rent, which was due on__________ is as of this point, late. Due to the global COVID-19 pandemic, our county government mandated salons to close temporarily. <<INSERT LINK TO COUNTY/STATE WEBSITE SHOWING MANDATES>>. Therefore, my business is unable to create income or cash flow during this time. This is an unprecedented situation that we are in together and I hope that it is behind us quickly.
I am working very hard to protect the health and safety of my salon community, provide support to my employees, preserve my business, provide support my employees who are unable to work, and manage our bills/creditors. Some of the resources I have sought out are <>
However, currently, I have no option but to request delayed rent payments and that you will waive any late fees. I plan to have the amount of $_____________, which was due on _______________, to you by ___________________.
I appreciate your understanding as our community works together to battle this pandemic. Your agreement will enable my business to continue through this downtime so our partnership can continue. I want to continue to work together during this unprecedented time and I will continue to provide updates to you regularly. Please reach out to me if you have any questions.
Sincerely,
<>
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<<TITLE, SALON NAME>>
