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Debt Relief Options for Salons and Spas Impacted by COVID-19

Financial Assistance Programs

The government has implemented several financial assistance programs to help small businesses, including:

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  • The Paycheck Protection Program (PPP) – Provides potentially forgivable loans to cover payroll and other expenses. Salons and spas may be eligible if they meet the small business criteria[1].
  • Economic Injury Disaster Loan (EIDL) – Low-interest, long-term loans of up to $2 million. Can be used for operating expenses like debt, payroll, and bills[2].
  • Shuttered Venue Operators Grant – Targeted relief for entertainment venues, which some spas may qualify for[3].
  • State and Local Aid – Many states and cities offer grants, loans, or tax relief for impacted small businesses.


Filing for bankruptcy protection stops collections and wipes out or restructures debts. Two potential options:

  • Chapter 7 bankruptcy – Liquidates assets to pay creditors, wiping out remaining eligible business debts[4]. However, this would require closing the business.
  • Chapter 11 bankruptcy – Allows restructuring debts while keeping the business open. However, it can be complex and expensive[5].

Consult a business bankruptcy lawyer to discuss if this strategy makes sense. The timing and specifics of the filing can significantly impact the outcome.

Debt Settlement

Debt settlement companies negotiate with creditors to settle debts for less than owed. This avoids bankruptcy but typically requires lump-sum payouts and taxes on forgiven debt. Reputable companies charge fees based on success. Be wary of high upfront fees.

Hardship Programs from Lenders

Contact all lenders directly to ask for hardship assistance options. Many are offering COVID-19 relief, including:

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  • Deferred or reduced payments for 6-12 months
  • Waiving late fees during assistance period
  • Lower interest rates
  • Extended payment terms

Get any proposed changes in writing before signing. Be prepared to show COVID-19 has impacted your ability to pay.

Negotiating with Landlords and Vendors

Don’t be afraid to negotiate temporary arrangements on debts and contracts to ease cash flow gaps. Many creditors are amenable, as they want to retain viable future customers.

  • Rent – Ask for a temporary reduction or deferral. Offer to extend the lease or pay back missed rent over time.
  • Loans/Leases – Request payment deferrals if possible. Ask about early termination without penalties if necessary.
  • Suppliers – See if they can pause or reduce contracts, deliveries, or payments for a few months. Offer to sign a longer agreement in exchange.

The key is communicating early and showing you want to pay but need some short-term flexibility. Having a plan to get back on track makes negotiations more fruitful.

Longer-Term Strategies

Once the initial crisis stabilizes, salons and spas should reevaluate their business models for the future. Some ideas:

  • Diversify revenue – Add lucrative services like medical aesthetics, nail care, tanning, fitness classes, or retail.
  • Optimize operations – Carefully analyze pricing, staffing levels, opening hours, inventory management, and other controllable expenses.
  • Go contactless – Invest in technology for online booking, contactless payment, automated marketing, and virtual consultations.
  • Get lean – Consider downsizing space, equipment leases, and other fixed costs to improve profit margins.

Thriving in the post-pandemic landscape may require making some pivotal business model shifts. But with grit, creativity, and expert legal and financial advice, salons and spas can regain their financial footing.

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When to Seek Professional Help

Don’t wait until debts overwhelm you. Consult qualified legal and tax professionals early for personalized advice on the best path forward. They can review the specifics of your situation and explain all options clearly, including potential risks and benefits. This helps business owners make informed, strategic decisions to resolve debts and succeed long-term.

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