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Running a beauty salon takes more than just styling skills—you need enough money to keep things running smoothly. From buying supplies to paying your team, costs can add up quickly. That’s why it’s essential to have the right financial support.
If you're considering a loan to help with expenses or to grow your salon, it's important to know your options. But with so many choices, how do you pick the best one?
At SMB Compass, we help beauty salon owners find the right loan to meet their needs. In this guide, we’ll walk you through the best loan options available so you can choose the one that works best for your business. Remember, not all loans are the same, so take the time to compare them before you apply. With the right loan, you can focus on what you do best—making your clients look and feel great!
What is a Beauty Salon Loan?
A beauty salon loan is a type of small business loan designed specifically for beauty salons. It provides the money you need to cover expenses like buying new equipment, stocking up on products, paying rent, or hiring staff.
These loans help salon owners manage their day-to-day costs or invest in growth opportunities, like expanding services or opening a new location. Essentially, they provide financial support tailored to meet the unique needs of their beauty business.
How a Beauty Salon Loan Can Help Your Business
The beauty industry has grown more competitive recently, with salons popping up in nearly every corner. To stand out, many beauty salons are expanding their services or offering unique products to attract more clients.
At SMB Compass, we’re dedicated to helping salon owners turn their dreams into reality. Our salon business loan programs provide the funding you need to grow your business, whether it's for expanding services, hiring new staff, or managing everyday expenses. With our support, you can focus on what matters most—making your salon successful. Our loans can help you with:
Purchase or Repair Equipment
Running a beauty salon requires essential equipment like hair dryers, spa chairs, and tanning booths. These items can be expensive, and paying them out of pocket might not always be possible. Equipment financing can help you invest in these tools without putting a strain on your budget.
Investing in quality equipment is more than just an expense; it's an investment in your salon’s success. High-quality tools help you provide top-notch services that keep customers coming back. Maintaining your equipment is crucial to keeping your salon modern and professional.
Add Inventory or Supplies
Keeping your salon well-stocked with essential supplies like shampoo, nail polish, and hair treatments is critical for smooth daily operations. However, buying these products, especially premium brands, can be costly. A business loan can provide the funds you need to keep your shelves full if your cash flow is tight.
In a competitive industry, having a unique or superior product offering can set your salon apart from others. Ensuring you have enough inventory helps you avoid missed revenue opportunities and keeps your business running efficiently. You can always be prepared to meet customer demands with the right financial support.
Improve Marketing and Advertising
Customers are the lifeblood of your business. While loyal clients are essential, consistently attracting new customers is crucial for growth. Without new clients, your salon may struggle to expand or maintain its current level of success.
A well-planned marketing and advertising campaign can significantly increase your salon’s visibility and reach. A beauty salon loan can help you invest in these efforts and drive more traffic to your salon or website, ensuring a steady flow of new clients.
Handle Cashflow Problems
Like any business, beauty salons can experience slow seasons where revenue dips. Even during these off-seasons, your expenses don't go away—you still need to pay your staff, cover rent, and manage other operating costs.
A beauty salon loan can provide the financial cushion to navigate these challenging periods. Access to additional funds allows you to keep your salon running smoothly even when cash flow is tight or after an unexpected expense.
Improve Salon Ambiance
Beauty salons are upscale by nature. As a salon business owner, you don’t have to build a building from scratch to provide your clients with a welcoming and relaxing environment. A less expensive way to improve your existing salon’s ambiance is through renovations or simply by changing the color of your walls.
“But that still requires capital!” You’re right. But it will cost you less than needed if you were to construct a new building. Beauty salon loans can help fund your renovations, redecorations, and other salon improvement projects so you can provide the best experience for your clients.
Ready to Get Funded Today?
Quick application loan process and approvals in less than 24 hours
The Best Beauty Salon Loans For You
SMB Compass offers different types of financing options for your business loan for hair salon needs. We also have financial advisors on hand, ready to help you determine which option is right for you.
Here are the most common types of financing for beauty salons:
SBA 7(a) Loans
The Small Business Administration (SBA) offers SBA loan programs to help small businesses obtain long-term financing. These loans reduce lenders’ risk by guaranteeing up to 85% of the loan amount, making it easier for businesses to get approved.
The SBA 7(a) loan is the most popular option. It offers high loan limits, low interest rates, and long repayment terms, making it a great choice for many business owners. You can use an SBA 7(a) loan for almost any business expense, such as expanding or renovating your salon, buying inventory, refinancing debt, purchasing equipment, or acquiring real estate.
However, qualifying for an SBA 7(a) loan can be challenging. Lenders usually want you to have a credit score of at least 620. Plus, you’ll need to submit a lot of paperwork and wait about three months for a decision.
If you’re patient and willing to go through the process, an SBA 7(a) loan can be an excellent option for your salon’s financial needs.
Business Line of Credit
A business line of credit works like a credit card, giving you access to funds whenever you need them. Unlike a traditional loan, you only borrow what you need and pay it back over time. You’ll only pay interest on the amount you actually use.
When you qualify, the lender sets a credit limit based on your credit score, revenue, and financial history. As you draw from your line of credit, the available balance decreases. As you make payments, your available credit increases again.
You can continue using the business line of credit as needed as long as the account remains open. It’s a flexible way to manage cash flow and handle unexpected expenses.
Bridge Loan
Equipment financing gives beauty salon owners the funds to purchase essential equipment without straining their cash flow. Whether it’s stylist chairs, hair dryers, or point-of-sale systems, this type of financing allows you to cover the costs of necessary tools without the burden of large upfront payments.
One of the key benefits of equipment financing is that it’s self-securing. This means you don’t have to put up additional collateral to secure the loan—the equipment itself acts as collateral. However, it’s important to note that if you default on the loan, the lender can seize the equipment.
There are two main options for equipment financing: equipment leasing and equipment loans. Lenders set the rates and terms, and the repayment period is typically based on the expected lifespan of the equipment.
Business Term Loan
A business term loan is a traditional financing option where small business owners receive a lump sum of cash upfront, with a fixed repayment schedule, typically weekly or monthly.
With a business term loan, salon owners can access up to $5 million, with repayment periods extending beyond 10 years. You’ll need a strong personal credit score, a solid financial history, and a proven business track record to qualify.
Business term loans are categorized into short-term, medium-term, and long-term business loans based on their repayment duration. Each option offers different benefits depending on your business’s specific needs and financial goals.
Tips to Improve Your Chances of Getting a Salon Loan
If you’re ready to move forward with your application and secure funding for your salon, here are some tips to help you qualify for the best terms:
1. Shop Around for Options
Lenders vary in what they offer. One lender might have favorable terms, but another could provide even better options. Don’t limit yourself to a single lender—compare different offers. Knowing what other lenders can provide gives you leverage to negotiate a lower rate or better terms with your preferred lender.
Even if you don’t secure a lower rate, exploring multiple options will increase your chances of landing a great deal. Choose the lender that offers the best overall terms for your needs.
2. Consider Your Needs
Before applying, think about what you need the loan for. Is it for equipment, daily operations, or a temporary capital boost while waiting for more permanent financing?
Understanding your needs helps you estimate potential returns and plan your repayment strategy. Additionally, lenders may ask why you need the loan. Being clear on how you’ll use the funds and the benefits to your business can enhance your credibility as a borrower.
3. Know Your Financial and Credit Standing
Each lender has different credit and financial requirements. Before you apply, assess your current financial and credit situation to see if it meets the lender’s criteria.
If you don’t meet the requirements, you have two options: wait until your credentials improve or find a more flexible lender with your current situation.
4. Understand the Costs
Salon financing comes with costs, including interest rates and various fees, such as administration, processing, origination, and other miscellaneous charges.
Before signing the loan agreement, review all fees carefully to ensure you’re fully aware of the total cost. This will help you avoid any unexpected charges down the line.
5. Submit Complete Documentation
Submit all the required documents upfront to expedite your loan application process. With complete documentation, lenders can quickly assess your eligibility, speeding up the decision-making process.
Submitting all necessary documents also demonstrates your commitment to securing the loan, which can positively impact the lender’s perception of your application.
How to Qualify for Beauty Salon Business Financing
If you're looking to secure financing for your beauty salon, here’s what you’ll typically need to qualify:
At least 1 year in business
Minimum revenue of $20k per month
A credit score of 650 or higher
A simple one-page application
3 months of bank statements
A traditional bank loan can be slow and complicated for beauty salons. At SMB Compass, we understand your industry's unique challenges. Our financing solutions are designed to quickly provide the working capital you need to keep your salon thriving.
Our requirements are tailored specifically for beauty salons, ensuring a smooth and straightforward approval process. We skip the lengthy paperwork and focus on quickly getting you the funds you need.
We know your time is valuable. Our streamlined process zeroes in on what truly matters—your salon’s revenue and ability to deliver exceptional services. We’ll take care of the financial details so you can focus on running a successful beauty salon.
Ready to Get Funded Today?
Quick application loan process and approvals in less than 24 hours
How to Get a Salon Business Financing
1. Quick & Easy Online Approval
Our secure online application takes just minutes to complete. We’ll ask for basic details about your beauty salon, including revenue figures, to get a clear understanding of your business.
2. Minimal Paperwork
We keep things simple by only requiring a few essential documents, like bank statements or tax returns, which you can easily upload through our secure system. Our focus is on making the financing process smooth and hassle-free for you.
3. Fast Funding Decisions
We know that time is crucial in the beauty industry. That’s why we prioritize quick approvals, ensuring you receive a funding decision swiftly. This allows you to access the capital you need without unnecessary delays, so you can keep your salon running smoothly.
4. Get Funded Quickly
Once you’re approved, finalizing the agreement is straightforward. We’ll take care of any remaining details and deposit the funds directly into your account. This gives you quick and easy access to the capital you need, allowing you to focus on growing your successful beauty salon.
FAQs About Beauty Salons
The minimum company income will depend on the lender you work with. But as a good rule of thumb, aim for an annual income of at least $25,000 to increase your chances of getting a business loan.
To know more about our business loans, you can fill out our simple loan application form, and we’ll get back to you as soon as we receive your request.
Again the loan requirements will depend on the lender and your qualifications. Traditional lenders, especially, will consider borrowers with a minimum credit score of 620. Banks are especially risk averse. They will require borrowers to demonstrate excellent credit history and financial track record as this is considered a less risky borrowing arrangement. If you’re applying for an SBA loan, you might have to present a stellar personal credit score and financial track record.
Alternative lenders, on the other hand, maybe more lenient. They may work with businesses with a minimum credit score of 500.
It depends. A lot of factors can contribute to the determination of your loan rates. For instance, your credit score, revenue, collateral, location, type of lender, and type of loan will play a huge part in the rate.
Interest rates aren’t the only consideration. The lenders may also charge extra fees, such as origination fees, prepayment penalties, etc., which will add up to the total cost of the loan.
Yes. Any business can apply for grants as long as they can meet the grant’s eligibility requirements.
There are different grants for business owners. Grants for women business owners are especially famous. There are also grants for minorities and other underserved businesses.
If you do apply for a business grant, know that the competition can be fierce. Chances are, all small business loans that fit the criteria of the grant could be sending in applications. If you want your business to stand out, you’ll have to create a compelling backstory and business plan to convince the organizations.
Starting a beauty business without money is possible if you get creative. Here are some ideas to get you started:
You can offer mobile services or work as a freelancer, using clients' products to avoid upfront costs.
Promoting your services on social media platforms like Instagram and Facebook can help you build a client base without spending money.
Partner with local businesses to offer your services in exchange for space or supplies.
Consider trading your beauty skills with others, like a marketer or web designer, for help with things you need.
Look into microloans or grants specifically aimed at helping startups, especially those owned by women or minorities.
Yes, owning a beauty salon can be profitable if managed well. Profitability depends on several factors: location, pricing, services offered, and how well you manage your expenses. You can build a loyal client base and generate consistent profits by providing excellent customer service, offering a range of in-demand services, and managing your costs effectively.
Here are a few ways to make extra money in your beauty salon:
Offer Additional Services
Add complementary services like nail care, massages, or skincare treatments to your menu.
Sell Retail Products
Stock and sell popular beauty products, such as shampoos, conditioners, skincare products, and cosmetics. Clients often prefer to buy products recommended by their stylist.
Loyalty Programs
Create a loyalty program that rewards repeat clients with discounts or free services, encouraging them to spend more.
Host Workshops or Events
Offer beauty workshops, tutorials, or special events, such as "girls' night out" sessions, where clients can learn and enjoy services together.
Here are steps you can take to protect your salon during an economic downturn:
Offer a wide range of services at various price points to attract different types of clients.
Focus on retaining your existing clients through excellent service, loyalty programs, and personalized promotions.
Monitor your expenses closely and find areas where you can cut costs without sacrificing quality.
Consider offering payment plans or financing options for high-ticket services to make them more accessible.
Maintain your marketing efforts even during tough times. Stay active on social media, send out newsletters, and offer promotions to keep clients coming in.