Hello everyone,
Its been a little difficult to keep up with my pledge to try to counter balance unhelpful, angry, derogatory, or otherwise just trolling like comments with things that might be helpful, or at least thought starters on what you can do moving forward with an eye on successfully managing your business through this crises.
This post is a big one, so I am going to lump the last few attacks into one post here. So thank you to @Sarah977 @J-Renato0 @Sam397 for the posts (also they share the honor or all being multi-post contributors!)
As everyone who has been hosting in any consistent way knows, cleaners and maintenance folks are critical to being a good host. Without good cleaners you can’t trust that things are guest ready, cleaned and disinfected. And I am betting that most here have had the 11pm call that something is broken and hopefully most of you had your go to maintenance person to help in a pinch when it does happen.
Well, while we are hurting during this time, so are our most valuable partners, the cleaning and maintenance contractors. I have found that in many cases our cleaners and maintenance staff may not know that there are relief options out there for them, given their income has been greatly impacted by Covid 19 and they are entitled to help just like the owners of the homes or the property managers are.
Below is an email I wrote out to my cleaning folks, that maybe will serve as a template of sorts for you. I worded it in an informal manner to cater to the audience, so that may not be the style you choose, but I am hoping it’s a starting point. I think its our responsibility to educate our partners on their options, and I hope that everyone is doing just that, so that these unsung heroes of the vacation rental industry can get the relief they need to put food on the table and pay their bills while we ride through the storm.
Let me know if you have any questions, and thank you again to @Sarah977 @J-Renato0 @Sam397 For your posts!
Dear XXXXX XXXXXX,
First, I want to thank you for the amount of work and dedication you have put into making this company successful. Our cleaners are a fundamental part of our business, without you, we cannot be successful, and you and your family’s hard work for us certainly does not go unappreciated.
In the extremely difficult times we are facing right now, where travel has essentially ground to a halt, I want to be sure you know that XXXXX, the team and I are doing everything we can to try to support you and keep you working and paid throughout this crises.
A part of our efforts to take care of our cleaners, we want to share with you some of the government relief options that available to you, which I encourage you to sign up for ASAP if you qualify. The funds are limited and the applications are processed on a first come first served basis. Below you will find instructions on how to fill out the application for the Economic Injury Disaster Loan. Please reach out to me if you have any questions on it! Below are detailed instructions as well as the amount XXXX has paid you during the 12 month lead up to the crises, which you will need to complete the applications.
- Two Types of Loans
- Payroll Protection Program
- This only applies to you if you have a payroll under a registered business. I won’t cover that application here, since, to my knowledge, you don’t have actual payroll. If you do, please let me know because this is a very very good program for those with payroll (i.e. you’ve paid payroll taxes). You can also apply as an individual proprietor on this program, but there is no forgiveness for the loan amount, although the interest rate is favorable at .5%. If you do not have payroll, you have until the 10th to make a decision as that is the first date you can apply as a sole proprietor for the Payroll Protection Program, and in the meantime I would suggest you apply for the EID, outlined below.
- Economic Injury Disaster Loan (EID) (https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-...)
- The SBA’s Economic Injury Disaster Loan provides vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing as a result of the COVID-19 pandemic. This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19.
- Under this program, you will apply and input the gross income and costs of goods sold, and then you will hear back from a lender on how much you qualify for. You will want to apply for the $10k “advance” as well, which is 100% forgiven (meaning you do not have to pay that back), and anything above that will be re-paid under a 3.75% interest rate, with favorable terms. So to reiterate, if you apply, you could get $10,000 in relief funds that do not have to be paid back, and anything above that you will have to pay back.
- To give you my personal opinion: taking on debt is a very serious thing. What you don’t want to do is “steal” or borrow from your future income unless you absolutely need to. So, if you apply and find out you are qualified for some amount and only some of that is under the “Advance” option, meaning you will have to pay back some of it in the future plus interest, you need to be sure to set a plan on how to be sure you can afford to pay that back. The best feature of this is that you can qualify for a forgivable $10k that you will not have to pay back, and we hope that will be enough for you as we generate more demand on our end to keep you working. Once you find out how much you qualify for, be sure to ask your lender exactly how much you will owe out of that and when. I would be happy to give you my thoughts if you reach out with your specific situation on what you qualify for. Whatever you decide to do, remember that the portion that in not the forgiven “advance”, will be owed to the government. So don’t spend this money unless you absolutely need to, as it will be coming directly from your future income.
The EID application process is very simple. And I will walk through it below.
First, go to https://covid19relief.sba.gov/
On the page you will see the below fields. In the first box, select the appropriate option, which if you are an LLC, select box 1 and if you do not have a registered business, you will fall under a “sole proprietorship”, so select option 2.
In box 2, review and check all boxes as long as accurate to your situation.
From there, move on to the next page.
On the next page, you will mostly need to fill out personal info, but I will clarify a few of the boxes you may have questions on.
In Box 1 and 2, which are required, it asks for your Business Legal Name and Trade Name. If you are a registered company, like an LLC, you will enter the registered business name. If you are a “sole proprietor” (you haven’t registered your business, but you default to this if you are conducting business activities), you will enter your legal name.
In box 3, you are asked for your EIN or Social Security Number. If you are a registered business, you should have your EIN on your origination documents through the state. If you are a sole proprietor, then enter your social security number.
Once you get down to the box “Gross Revenue for 12 months” you will need to input the amount of revenue you were paid by our company and any other revenue for your business that was outside our company.
Your gross revenue from XXXXX for the period they are asking for was: $33,848.13
So add that number t to what your cleaning service has made from other customers for your total gross revenue.
COST OF GOODS SOLD
Next up is your Cost of Goods Sold. I know this is probably a confusing sounding term if you aren’t familiar with accounting terms, so let me clarify what it means. While it sounds like it might not apply to you, because intuitively, you aren’t selling “goods”, this term really means direct expenses that go into the service your business provides.
Basically cost of goods sold are the direct costs for you to clean a house. For example, supplies you purchase to clean the house fall under cost of goods sold. How much you pay yourself or any one you employee, also fall under cost of goods sold. Driving expenses from each house to the next are also considered cost of goods sold. You will need to be sure you have a record of these expenses in the same way you need to have records for expenses like these on your tax forms each year to write off the expenses for tax deductions.
Cost of goods sold is critical for you to understand even outside of this situation, as it tells you how much it costs for you to clean each home. So be sure that you are keeping good logs of these costs if you aren’t currently.
So for example, lets say that you have been paid by XXXX $20,000 in the 12 months leading up to the Covid crises (12 months prior to February 1st). You check your records and during that time you purchased $2,000 in cleaning supplies that you used only for cleaning those homes. You also have a driving cost of $300 that you have recorded as expenses for driving in between houses and to houses from your home. Finally, you also hired some family to help from time to time, totaling up to $1,000 in payment to them. Your Cost of Goods sold is $3,300 (the three expenses I just outlined) and your Gross revenue is $20,000 (the amount you were paid for the services during that period).
Its important to note that you can only put cost of goods sold as the amount you spent ONLY for cleaning houses. Do not include any personal expenses (meals, things you used for your own home, ect). Also do not under report COGS, which means if you are writing things off as expenses on your taxes, then you need to put them as COGS on this application. When the loan application is reviewed, they will ask for documentation and it may cause issues if you are not appropriately assigning COGS.
The next few fields have to do with if you received compensation through various non-profit type organizations, input the requested info in any applicable fields.
Next you will fill in a bunch of personal information until you get to the Business Activity field. For this field, enter “Personal Services”
In the next field, detailed business activity, select “Maid and Cleaning Service”
Once you are done, you will move to the next page and fill out the remaining fields as applicable.
The final guidance I’ll give, and this IS CRITICAL, is to check the box on the last page that says something like “I want to be considered for the “advance”….that is what will put you into consideration for the forgivable $10k.
Then click on submit and you will be done. Hopefully you will hear back in 3 or so business days. Be sure to save your application number!
I hope this helps as you work though this difficult time. Know from our entire team that we are here to help, and please do not hesitate to reach out me personally with any questions. Feel free to text me at XXXXX any time, and I will give you a call back ASAP.
Thank you again for everything you do.
Best wishes,
XXXX
