How the CARES Act can help your yoga studio.
It’s the tough times, not the easy ones that define you as a yoga studio owner. Right now, the entire world is facing unprecedented challenges. How will you keep your business alive and support your community through this uncertain time?
Truth → How you navigate this crisis will define your business going forward.
Your studio community is looking to you to remain calm and provide stability through this uncertain time. You can’t provide the support your community needs if your finances are a mess.
Your rainy-day fund only goes so far. Get the help you need.
The Small Business Administration provides several kinds of loans to help you right now. These can make the difference for your yoga studio by helping you stay in the black. This crisis isn’t going away. Your community will probably be sheltering in place for a while, and even after it’ll take time for business to ramp back up, so do what you can to prepare.
Disaster Relief Loans are a low interest, federal loans for unforeseen disasters, like earthquakes, floods and hurricanes. Now they’re open to small businesses suffering substantial economic injury as a result of COVID-19. Yoga studios definitely fall under this umbrella. Without in-person classes, it’s much harder to pay your bills.
THE SMALL PRINT: Disaster Relief Loans have low interest rates and can be used for day-to-day studio expenses like rent and payroll. They cannot be used to refinance existing debt, replace profit or fund new purchases. If you’re approved for a loan over 25K it will require collateral.
SBA Express Bridge Loans exist to bridge the gap between application and payout of SBA Disaster Relief Loans. While you’re waiting, your studio can receive an emergency loan of up to $25K. These loans can make a BIG difference if you need cash fast.
Sound too good to be true? There is a catch… your business must have an existing relationship with an SBA lender – prior to March 13, 2020. Try checking with your bank to see if they offer SBA loans.
The CARES Act created even more options for Studio Owners.
The Coronavirus Aid, Relief and Economic Security Act (CARES) is designed to give our economy a helping hand during the pandemic. Many individual Americans benefit from stimulus funds and expanded unemployment and medical leave. You’ve likely received a stimulus check…or you will soon.
This stimulus package also created options for small businesses. The biggest one is the Paycheck Protection Program. The goal is to keep as many people working as possible, so your PPP Loan amount is based on your payroll. Your studio probably qualifies for one. You must have 500 or fewer employees living in the United States to qualify.
Truth → This program is unique because it hands out loans you might not have to pay back.
THE FINE PRINT: These funds can only be used for payroll, health insurance premiums, paid sick, family or medical leave, mortgage interest (not principle or prepayment), commercial rent and utilities and interest on debts incurred prior to April 3, 2020.
They’re only good for a limited time frame. Expenses can be backdated to February 15 and dated forward to June 30, 2020. You can also use a PPP Loan to refinance an SBA loan made between January 31 and April 3, 2020.
Truth → PPP Loans are a great opportunity because of the extremely low 1% interest rate and possible loan forgiveness.
During the first 8 weeks after you’re approved the money you use may be eligible for loan forgiveness. The money you receive must be used for payroll, mortgage interest, rent and utilities…and no more than 25% of the forgiven amount can be something other than payroll.
**What is loan forgiveness? It’s this simple → if you follow the rules, you don’t have to pay the money back. Your loan is completely forgiven! BOOM!**
That means if your payroll is low compared to your rent and utilities you might not get the whole loan forgiven. Not to worry though, whatever’s left will still get that super low interest rate.
The catch with the Payroll Protection Program
This program is amazing. It provides incredible benefits for small business owners and EVERYONE has jumped to take advantage of it. Unfortunately, that means as of 4/16/20 the SBA has been unable to fund any newly approved loans.
Congress is considering providing additional funds for small businesses, but nothing has passed yet. Stay tuned for updates. This is the time to contact your congressional leaders and urge them to support small businesses through this crisis.
Other benefits from the CARES Act include the option to carry back net operating losses for your studio to past years. That can offset your taxable income for 2019 or previous years, netting you a bigger return or a smaller pay in.
If you haven’t done your taxes yet and think you might be a refund it’s a good idea to file. The IRS is still processing most e-return refunds within 21 days. The new deadline is July 15, 2020.
What can YOU do now? Stay informed!
Do a deep dive into your studio’s books. Knowing your finances is always critical for running a successful studio – that goes double for rocky times. You’re setting up a lot of new systems to take your studio online. It’s easy to get caught up in the day-to-day of pivoting your yoga studio . Make sure you don’t lose sight of the big picture.
Not every business will survive the economic impact of this pandemic, and it’s important yours makes the cut. A clear understanding of the numbers helps you make the best decisions for your future. Keep on top of upcoming funding for CARES and other legislation that can help!
Struggling to adjust your studio to social distancing rules? Confused about what to do next to keep your studio running? Get The Ultimate Studio Survival Guide during Social Distancing so you can respond with confidence and keep money coming into your studio during this time. Take action now to get our special PAY WHAT YOU CAN pricing. Click here to get started!