How to Find the Best Business Loans for Your Beauty Salon
It’s no secret that the beauty salon industry has had difficulty getting financing for their businesses in the current economy. Whether you are a member of a credit union or have a business bank account at a national bank, it is challenging to get many types of salon loans or any bank loan from a traditional lending route, for that matter. It’s not you, but the industry. However, these are new times in small business lending. With the growth of new alternative business lenders, a small business owner has more financing access than ever before.
Traditional lenders see business financing as extremely risky, which means qualifying for bank loans is difficult. These lenders won’t give nail salon loans out to just anyone. They’ll likely require a borrower with an excellent credit score, a robust business plan, and significant amounts of collateral. Some could even ask you about your relevant hospitality services experience as well.
We’re not your traditional route for nail salon loans. AdvancePoint Capital’s services, accompanied by our extensive network of business funding providers, offer you the best option to get the funding you need.
AdvancePoint Capital has been experienced as a funding provider for the nail salon industry for years. We understand the difficulties of operating a nail salon and the need for business funding to support it. Our job is to provide the best business funding products to you to run your business effectively. Our lenders can help you access the best alternative business lending products through our simple process.
Whether you’re looking for equipment financing, need some working capital, or a growth plan on expanding operations and revenue — we have the best and most reliable business funding solutions for your nail salon or salons and spas. Contact us a see the difference in our services.
The 6 Best Business Funding Options for the Beauty Salon Industry
Long-Term Small Business Loans
A Long-term business loan is the most desirable as they offer the most extended terms to repay, typical loan term business loans from 2 to 7 years. Long-term business loans are a lump sum provided upfront with rates that start around 6% with monthly payments.
Long-term business loans require high credit standards and gross revenue as they are bank loans for an established nail salon with at least two years in business. Significant amounts of additional paperwork are required, and the process can take up to a week or more for many nail salons. This is an excellent product for salon proprietors with long-term growth plans.
- Low-interest rate starting from 6%
- Term loans from 1 to 7 years to repay
- Accommodates a larger loan amount
- Monthly payments
Short Term Small Business Loans
A short-term loan is a term loan that provides a lump sum of money, which is then repaid over 6 to 18 months. When approved, you get a fixed amount for a set amount you have to pay back. A short-term loan has a fixed payment auto-deducted from your bank account monthly, bi-weekly, weekly, or in some cases daily out of the bank account.
For short-term small business loans, limited paperwork is required, and credit report requirements are more lenient than banks or traditional term loans. The difference between loan terms will impact approval.
Benefits of Short Term Small Business Loans:
- Excellent to poor credit score considered
- A business loan amount as little as $10,000 up to $500,000
- Lower monthly or annual revenue requirements than those of traditional loan terms
- Fast and simple loan process. Capital within 24 hours
Business Line of Credit for Beauty Salon
A business line of credit is a small business financing option that offers a flexible feature that a short-term loan does not. It works like a credit card in that it is a revolving line of credit and allows you to draw money out and then repay at any time with you only paying principal and interest on your outstanding balance. A business line of credit has a credit limit that you cannot exceed and is set at the time of consummation.
Benefits of Business Lines of Credit
- Interest rates from 4% to 7%
- Loan terms from 3 to 25 years
- Revolving line of credit, save on interest when you pay off the loan early
- Attractive repayment terms
- A variety of acceptable uses of money
- Fast and simple application process
Small Business Administration (SBA) Loans for Beauty Salons
The Small Business Administration (SBA) is a federal government agency that provides programs, guidelines, and loan guarantees to approved lenders for business loans. The SBA is not a lender and merely provides a guarantee that gives approved lenders the ability to take on the risk of business lending with attractive rates and terms that could not normally be afforded to small businesses.
Without the Small Business Administration (SBA) to provide guarantees, the approved lender would not be comfortable lending under the terms outlined by the Small Business Administration (SBA). The Small Business Administration’s SBA loans are very popular but difficult to acquire due to the lender’s requirements, guidelines, and restrictions. AdvancePoint Capital can help guide salon owners through the process in a clear, fast, and efficient manner to have the best likely hood of approval.
Most Popular SBA Loan Programs:
- Standard 7(a) SBA Loans – This is the SBA’s primary program designed to provide working capital to small business owners. SBA loan guaranty percentage and loan amount, the terms and conditions may vary by the type of loans to small businesses.
- 504 SBA Loans – This is a powerful commercial real estate loan program that will provide small businesses another avenue for business financing while promoting business growth and job creation.
SBA Loan Product Information
Rates: Rates starting at treasury index plus 1% to 2.5%
Terms: 3 to 25 years
Fees: Origination fees range from 0% to 3%
Payments: Fixed monthly payments
Credit Standards: Good to excellent personal credit score preferred, but all types of credit history considered.
SBA Loan Application Process: You will need to provide complete documentation. Application, six months of business bank statements, two years of business tax returns, year-to-date profit & loss, and a balance sheet, and more documents may be requested upon review.
(New) Paycheck Protection Program (PPP) SBA Loan
The Small Business Administration (SBA) has established the SBA Paycheck Protection Program loan to provide funding to businesses affected by the COVID-19 crisis. Contact AdvancePoint Capital for additional information about this disaster relief. A pharmacy is an eligible industry.
Merchant Cash Advance for Beauty Salons
Merchant cash advances (also now as future receivables purchase and sales agreements) provide an upfront lump sum of money to businesses in exchange for a fixed percentage of the businesses’ future sales. Repayment is typically made daily or weekly. An ACH payment auto deducted from a business’s bank account, or the percentage is taken out of future credit card sales until the payback obligation is met.
Terms are expressed as a future sale, so you are given a fixed amount and then responsible for paying back a greater amount through a fixed percentage of future sales. The difference between the amount given and the amount paid back to complete the agreement is your flat cost of money. The estimated time to repay is typically 6 to 18 months, but there are no term limits as the repayment is based on future sales. This product is very popular with the nail salon industry due to high credit card sales.
Benefits of Merchant Cash Advances:
- Flexible repayment terms attached to future sales
- Excellent to bad credit score considered, no minimum credit score
- Provides funds to owners with less than perfect credit
- Serves lower revenue businesses
- Payments fluctuate to future sales controlling the margin of profit.
- Fast and straightforward process. Capital within 24 hours
Business Credit Card for Beauty Salons
Business credit cards work the same as personal credit cards. They are a revolving credit with a credit limit with a minimum monthly payment requirement typically lower than that of a small business loan. You are issued a plastic card with an account number that can be used online and in person for any purchases. You only pay interest based on the current principal. This product is very popular with the nail salon industry and is used in conjunction with other business loan options.
Benefits of Business Credit Cards:
- It can be used 24 hours a day, seven days a week.
- No limitations on the use of funds
- Flexible monthly payments payments
- Principal and Interest rates
- Fast and straightforward process. Capital within 24 hours
- Serves lower revenue businesses
Benefits of Beauty Salon Financing
Cash Flow/Business Expenses/Working Capital Loans
Operating a successful business like a beauty salon is a complicated venture with many moving parts to it. Various issues can impact the company’s cash flow, like seasonality, holidays, location, changes in trends, and competition. For a beauty salon, failing to meet payroll is not an option, so it’s essential to have a working capital loan to handle industry ups and downs and stabilize the business bank account. From working capital to seasonal needs, nail salon financing is a sound option.
Business Facility Expansion/Renovations
Your beauty salon may need upgrades or repairs to the facility, spruce up the nail salon interior décor, or exterior appearance to maintain or attract customers and maintain a competitive edge. In some cases, a new concept may present the need for nail salon financing. This type of need is usually capital intensive and will require unique financing solutions to support the expansion and renovation opportunities.
The internet marketing landscape has become a must and has added additional costs to nail salon owners. That’s why financing for advertising is so prevalent in the nail salon business. Having a presence on the internet with various sources such as Google, Yelp, Trip Advisor, and social media like Facebook and Instagram is necessary. Maintaining a website with search engine optimization helps keep your small business on the top of google search. Additionally, more traditional sources like mailers and flyers are also advertising mainstay and expenses to operate.
Point of Sale Systems, Software, and Technology Upgrades
The point of sales systems is continuously improving and providing efficiencies to nail salon operations. You must make sure eventual investments in this area are a foregone conclusion, and financing will be needed. A business loan can be used to update systems and create more efficient processes within your operation. A nail salon owner should always be looking for new ways to keep their chairs full and improving the customer experience with easier processes and systems to help nail technicians make a significant impact.
When a nail salon acquires a new line of beauty products, it can be quite an expensive investment. When stocking up your location with products, order costs will often require financing. The fast, convenient and straightforward process to get Nail Salon Financing – now! Get Your Quote Today by filling out our simple form.
Equipment financing is a great way to get the equipment that beauty salons require without reducing the business’s capital on hand.
How Do You Get Beauty Salon Financing?
There are many options to consider, and with such a wide range of lenders and financing options available, it can be challenging to get started with the application process. Lenders will want some pertinent information, regardless if they’re an online lender or from a traditional financing institution. This information mainly serves to confirm your small business’s financial history and legitimacy — and nail salon owners should be informed about what information they should have on hand before applying for nail salon financing.
For years, we’ve empowered businesses around the country with the best financing opportunities and nail salon financing options that people like you can use to fund your operation.
Depending on the nail salon financing you’re looking at, each will have different requirements. However, there are some standard questions that you can expect to run across during your search for loan options.
How Long Has Your Beauty Salon Been in Business?
Time in business is a standard requirement for a beauty salon loan — or really any type of loan you plan on obtaining for your business. A new beauty salon is far riskier than an existing salon. This shouldn’t be news to any business owners reading this, but small business owners need to understand that due to the beauty salon industry’s high risk, lenders must know if you’ve been around for a substantial amount of time.
Time in business of an existing salon and experience in the industry shows that you can overcome obstacles and tackle challenges that come with running an existing business. The bottom line is if you’re in search of loans for beauty salons better, the longer in business, the more options and better terms you will receive.
Documents Necessary to Obtain Beauty Salon Financing
There are some documents that many lenders will require so that they can assess their nail salon financing risk. Business owners planning on getting nail salon financing should be prepared to provide the business’s bank statements, personal and business tax returns, profit and loss statements, cash flow forecast, and perhaps, even more, depending on the nail salon financing.
This information proves any revenue and profit — which is frequently a big player in whether or not you’ll qualify for the various financing options available. Now, what paperwork you’ll need ultimately depends on the business loan you are eligible for and from what outlets.
A business cash advance may require one thing, but bank loans are likely to have much harsher requirements. However, all of these documents we mentioned are relatively typical when attempting to obtain beauty salon financing.
What Are Your Borrowing Habits?
While many beauty salon funding options have varying credit score requirements, all of them will require some sort of personal and business credit score. Beauty salon owners need to show lenders how well they manage loans. It’s all about trust and sound investments when it comes to nail salon loans. So, a credit score is a great way to show that your borrowing habits are indeed fruitful for the lender.
Now, even if you have less than stellar credit, there are still nail salon loans that you can seek. However, the interest or terms may not always be what you’re looking for or even in your budget. That being said, they still provide financing opportunities that business owners can take advantage of for working capital or any other nail salon needs. Make sure you are constantly working to improve your personal credit.
Frequently Asked Questions
Is it hard to get a loan for beauty salons? How do I qualify for a small business loan for a beauty salon?
The answer really depends on what type of nail salon loans you’re considering. Some nail salon loans are far easier to qualify for, such as a business cash advance. In contrast, other loan choices could be a little more difficult for business owners, such as a term loan.
Credit score, time in business, and various financial statements will affect whether or not it’s challenging to obtain a loan for your beauty salon. So, it’s up to salon owners seeking financing options to make sure you research various possibilities and determine which loan they can apply for with success.
Again, this really depends on which nail salon loans you’re considering. Different loan options will have additional application requirements — so there’s no one size fits all solution to this question.
However, there are some typical avenues that many business owners take to open up a salon. Ensure you have a sound business plan, projected financial statements, ownership and affiliation documents, business certificates or licensure, loan application history, income tax returns, and a resume available. All of these items could play a critical role in opening up a new nail salon.
Depending on your lender, you may need to offer up a down payment or real estate as collateral for your loan. Typically, a down payment of around 10% is standard for salon equipment financing. However, that may change based on terms or other features of various loan options. For example, a term loan has very low interest rates.
Additionally, they allow applicants to cover less than the 20% down payment. And short-term salon loans don’t usually require any down payment at all. So, depending on the term loan option you’re seeking, you may find various loan down payments or real estate collateral for each.
Revenue will depend entirely on your location in the country, marketing skillsets, the number of customers, the types of services you offer(men & women?), your process, and how much capital you have to invest in your business’s growth. We suggest building relationships with other salon owners in the area if you are looking for input to operate your business.
The Bottom Line. Why AdvancePoint?
- Experience in the Beauty Salon Industry – We have been funding nail salon businesses for years.
- Trust – Excellent reviews and feedback from your local beauty salon and spa, hair salon, and nail salon.
- Loan Specialist – Experienced business funding specialists who know the beauty salon industry’s ins and outs
- Zero Risk – No cost, no commitment quotes
- Products – A variety of products. We don’t just offer what we have on hand; we gain access to everything available in the marketplace currently.
- Services – Fast, prompt, and responsive
- Happy Customers – We offer financing support for both minority-owned and women-owned nail salons.
The fast, convenient, and straightforward way to get the money you need for your small business – now!
Get your quote today by filling out our simple form.