Coping with COVID
Watson recognizes the risks of operating a salon in a county with 50 proven COVID-19 cases, but being a single mother supporting several children at home, she also fears accruing long-term debt to keep Facez by Cynthia viable.
Following Gov. Henry McMaster’s closure of salons across the state, on March 31, Watson gave herself one last day to dye customers’ lashes and eyebrows at a friend’s salon before boxing up her threads and hunkering down with her family for the next few weeks.
“I had so many customers looking for me, I thought I would just have a pop-up shop today. They only see me once a month anyway, so I just thought I could take care of them and they’ll be okay for a month,” Watson said.
Watson sees this time as her window for drawing up a battle strategy to preserve the business she debuted at Venus in February 2019.
“My biggest question is for someone like me who basically is the main employee, even though I do have other employees and their families pretty much depend on what is made from Facez: What will benefit me so that I am not having to — once we get started back up — go even harder to try to make this money back?” she said.
Right now, she plans to touch base with lenders, such as non-profit CommunityWorks that extended the capital she used to launch her business, to see if the Small Business Administration’s Economic Injury Disaster Loan or the Payroll Protection Program could serve as a lifeline for her livelihood.
“But still, a loan is a loan. At the end of the day, you still have to pay it back,” she said.
Tammie Hoy-Hawkins, CEO and president of CommunityWorks, knows small and micro-business borrowers, especially close-contact service providers like salons, will be some of the hardest hit by the COVID-19 shutdown, so she said her team is poised to offer guidance on the financing options petering from federal sources.
“We here have been working on loan modification for our existing borrowers. First step first. One, our staff is safe — so we work remote — and second is reaching out to our borrowers to see what position they are in and working with their business coach to look at modifying and deferring their payments over the next couple months,” Hoy-Hawkins said. “That was sort of our immediate response for existing borrowers, and then in addition, recommending and working with them to look at applying initially for the Economic Injury Disaster Loan product, which has very stable interest and can help to stabilize them in this case.”
At first, she said the flood of applicants jammed the SBA application system for the EIDL loans, but the system has since been simplified and streamlined. She doesn’t know of anyone who has received the up to $10,000 advance on the SBA loan yet, but she encouraged everyone who applies for the EIDL loan to also check the box on the application for the advance, which becomes a forgivable grant if recipients don’t qualify for the EIDL loan, she said.
She has also been keeping her ear to the ground throughout the week on incoming guidance from the Small Business Administration on the Payroll Protection Program so CommunityWorks can share that information with other lenders and the borrowers they partner with.
“What the federal government has provided for this loan is a 100% guarantee, so banks and organizations like us that participate would be fully protected if that borrower were to default, because that obviously is the biggest risk right now in providing loans to borrowers, because we don’t know what the next six months hold,” she said.
Hoy-Hawkins has been encouraging their borrowers to consider both EIDL loans and the Paycheck Protection Program, as eligible businesses will be able to benefit from both types of funding as long as the two sources don’t go toward one expense.
For example, she said funding from an EIDL loan and the Payroll Protection Program couldn’t be used to pay the same employee at the same time.
Hoy Hawkins said she has already seen some lenders attempt to take advantage of desperate borrowers and is working to make sure borrowers are going to trusted lenders such as established banks, SBA-approved lenders and the Small Business Development Center for counsel.
“We’re already seeing businesses getting emails saying, ‘Get cash now from us and when you get your federal money, you can repay us’ and in a lot of cases, those have extremely high interest rates and can be quite predatory, so we’re just trying to make sure we can educate folks about that,” she said.