Issue link: https://www.ascpskindeepdigital.com/i/1235208
for the latest info, visit https://www.ascpskincare.com/updates/blog-posts/coronavirus-and-your-practice 9 The unemployment system requires recipients to be "actively seeking work." One has to register with the state, actively search for employment commensurate with one's particular skills and capabilities, and keep a record of such job search efforts. However, the CARES Act commands the states to "provide flexibility in meeting such requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction." SMALL BUSINESS LOANS To help small businesses get established and compete effectively, the US Small Business Agency (SBA) has for decades mounted a series of support programs. For the most part, SBA has been a lender of last resort; applicants have had to show they tried and failed to line up general business funding from other sources. General business lending has been through the 7(a)-loan program. SBA has also operated a Disaster Loan program—one that springs into action after major catastrophes such as tornadoes, hurricanes, and earthquakes. The CARES Act makes significant expansion in eligibility for, and establishes much more generous terms for, both these lending programs in direct response to the economic fallout from the coronavirus. (Skin care and cosmetology businesses qualify as "small" so long as their annual revenues are less than $8 million.) Eligibility for Disaster Loans has been expanded to include sole practitioners and independent contractors as well as more traditional businesses with employees. All 50 states are considered a disaster area with regard to COVID-19 impacts. Disaster loans are long-term and carry an interest rate of 4 percent. Under the ongoing 7(a)-loan program, businesses work with a local bank to make a case for a loan, providing financial projections and reams of business information. The bank packages the application and sends it to the SBA. If the SBA approves the loan, that agency will guarantee 75 percent–85 percent of the loan. The local bank retains the remaining 15 percent–25 percent of the risk. Of likely greatest interest to esthetics and cosmetology businesses is an expansion of the 7(a) program through creation of the COVID-19-specific Paycheck Protection Program (PPP). This loan program is designed with the specific purpose of incentivizing employers to preserve jobs. Its watchwords are to expand eligibility (again, sole practitioners and independent contractors are eligible), cut red tape (few eligibility hoops), and move quickly. In government- speak, "This program gives small business access to short-term cash-flow assistance aimed to help deal with the immediate global impact caused by the COVID-19 pandemic." These loans are made by approved lenders, certified by the SBA, and are 100 percent guaranteed by the US government. Set formulas determine how large a loan you can seek, but these terms, which relate to payroll and occupancy costs, are generous. While interest rates on these PPP loans can be as high as 4 percent, the initial interest rate is going to be just 1 percent. Best of all, the principal amounts borrowed to cover eight weeks of payroll, rent, mortgage, and utility payments can be completely forgiven if the loan recipient keeps their group of employees on the payroll. PPP loan terms, other than adjusting for business size, will be the same for all applicants. SBA loan decisions, and resulting funding, will flow quickly. Loan packages will be processed in the order received—first- come, first-served—until the $349 billion set aside for this program is exhausted. To pursue a PPP loan, do not apply directly to the SBA. That will slow you down. Instead go to a local bank where you have a relationship and inquire whether that bank is an SBA-approved lender. If that isn't the case, ask that banker to refer you to another community bank that is so qualified. The SBA is looking to local banks to perform most of the loan eligibility screening. You should expect a warm reception from your local bank; though the interest rate is low, making loans that are 100 percent guaranteed by the US government means no worries about bad debts. Further, local banks prosper when their communities are economically healthy. They want you to stay in business. For more detailed information about SBA loan programs, here is another concise, helpful article from The Washington Post discussing how to obtain a small business loan under the CARES Act. Our recommendation to members interested in these loan options is to use the information available from the SBA to determine your eligibility and then to move quickly on applying if you fit both the eligibility requirements and the qualifying categories of business expenses for which you propose to spend loan dollars received. INCOME TAX DEADLINES EXTENDED Federal Tax Deadlines: All individual and business income tax filings at the federal level have extended deadlines from April 15, 2020, to July 15, 2020. State Tax Deadlines: As of April 1, 2020, all states but Idaho, Mississippi, and Virginia have extended state filing deadlines to July 15, 2020. STUDENT LOANS Federal student loan payments can be suspended through September 2020. While this does not apply to private student loans, it may be possible to call private lenders for more information about the possibility of suspending your student loan payment. We invite you to stay up to date on this and other related issues by continuing to visit www.ascpskincare.com/updates/ blog-posts/coronavirus-and-your-practice. There, we will post all of our news, blogs, and relevant information on the virus and resolutions for your practice.