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no collateral required*
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Intro To Beauty Salon/Spa Business Loans
Beauty salons must continuously evolve to survive in this massively competitive industry. Growing means maintaining a pristine appearance, offering new products or services, and of course, never turning away potential customers. However, staying competitive would be a lot easier if the demand wasn’t so difficult to predict. And just when you think you’re ready to expand your offerings, essential equipment might break or become outdated. United Capital Source can solve these common dilemmas with highly accessible and versatile Beauty Salon Business Loans.
In this guide, we’ll answer the following questions and more:
What Are Beauty Salon Business Loans?
Beauty Salon Business Loans are business loans geared towards the cash flow cycles and periodic expenses of beauty salons. In addition to covering short-term needs and larger purchases, these business loans can bridge temporary revenue gaps until demand picks back up.
Beauty Salon Business Loans can come in the form of:
- Business Term Loans
- SBA Loans
- Equipment Financing
- Business Line of Credit
- Working Capital Loans
- Merchant Cash Advance
- Revenue-Based Business Loan
How Do Beauty Salon Business Loans Work?
Each of the products listed above can suit a different type of expense or cash flow issue. For example, beauty salons are especially prone to temporary, occasional dips in revenue. Demand can rise and fall at any moment. This situation is best suited for a Working Capital Loan or Business Line of Credit. Borrowing amounts for Working Capital Loans are directly based on your operational expenses. Thus, if you’re looking to get through a rough patch lasting a few months or so, a Working Capital Loan can allow you to continue serving your customers as usual.
On the other hand, a Business Line of Credit is more cost-effective if you’re looking to cover operational expenses for a much shorter period or secure a moderately-priced one-time expense. Popular examples of such costs include extra supplies, inventory, or new equipment. You’ll pay less interest on a line of credit if you pay off the full balance as quickly as possible.
For more substantial investments like new equipment, you might instead consider a Business Term Loan, SBA Loan, or Equipment Financing. These products carry higher borrowing amounts and longer terms, which are ideal for launching new services or purchasing new lines of products to sell.
If you’re looking to start small with either strategy, we can customize your borrowing amount and terms to ensure you don’t take on more debt than you can afford to pay back.
Beauty Salon/Spa Loan Options Compared
|LOAN TYPES||MAX AMOUNTS||RATES||SPEED|
|Merchant Cash Advance||$7.5k – $1m||Starting at 1.09||1-2 business days|
|SBA Loan||$50k-$10m||Starting at 5%||3-5 weeks|
|Business Term Loan||$10k to $5m||Starting at 5%||1-3 business days|
|Business Line of Credit||$10k to $250k||Starting at 8%||1-3 business days|
|Equipment Financing||Up to $5m per piece||Starting at 5%||3-10 business days|
|Revenue Based Business Loans||$10K – $5m||Starting at 9%||1-3 business days|
What Are The Advantages of Beauty Salon Business Loans?
Beauty Salon Business Loans allow beauty salons to grow and stay competitive despite their rocky cash flow and sizable periodic expenses. After all, increasing revenue is one of the most logical ways to balance out cash flow issues.
Research has shown that up-selling current customers makes more financial sense than trying to gain new customers. Beauty salons can accomplish this by selling relevant products to customers who have just received their usual services. Business loans can give salons the funding to purchase inventory consistently while demand fluctuates, and other expenses arise.
Another option is offering new services, which will either require additional employees or additional certifications for existing employees. Rocky cash flow can also make it challenging to keep a sufficient amount of employees on staff throughout the year. But if you don’t have the staff to take appointments from new customers, they will give their business to the many other salons in the area. Business loans can ensure that you always have enough staff to make appointments, even when demand drops for a temporary period.
Lastly, it’s important to note that borrowers can access most of the six business loan products mentioned above with subpar credit. Women typically own beauty salons. The average woman’s credit score is approximately 25 points lower than the average man. Beauty Salon Business Loans can help female business owners pay off existing debts or get current on other payments to raise their credit score.
What Are The Disadvantages of Beauty Salon Business Loans?
Taking on additional debt is always a risk for businesses that are naturally prone to cash flow issues. Choosing the wrong repayment structure or borrowing the wrong amount could do more harm to your cash flow than good. These decisions are even more difficult in industries with unpredictable demand. How can you possibly know when it’s the right time to apply?
Major expenses also tend to create other costs. For example, let’s say you’ve just used a business loan to purchase new equipment and offer new services. But what if none of your employees have experience with these services or are not certified to provide them? What if you don’t have enough employees to handle the increase in responsibilities (i.e., confirming online appointments, selling products, providing new services)?
And even if you hire more employees, you must make sure they receive sufficient training and possess the right personality for the job. Using a business loan for hiring can cause you to speed up the interviewing and training processes. This is why many businesses end up borrowing too little. They forget that new hires don’t always contribute to revenue right away, and finding the right personality for the job can take a lot longer than expected.
Who Qualifies For Beauty Salon Business Loans?
Approved businesses generally met the following criteria:
How To Apply For Beauty Salon/Spa Business Loans:
The amount of paperwork required for the application depends on your chosen product. For most products, funds can be approved and distributed in up to three business days. Here’s how to apply:
Step 1: Choose the Right Product
The first step is choosing the most sensible solution to the problem at hand. This should require a decent amount of research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term cost? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Step 2: Gather Your Documents
Here are the documents and information required for the seven products mentioned above:
- Driver’s license
- Voided business check
- Bank statements from the past three months
- Invoice for equipment (for Equipment Financing)
- Credit card processing statements from the past three months (for Merchant Cash Advance)
SBA Loans require additional documents and information. To learn what’s needed for the SBA Loan application, visit our SBA Loan page.
Step 3: Fill Out Application
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Step 4: Speak to a Representative
Once you apply, a representative will reach out to you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
Step 5: Receive Approval
If and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, and Revenue-Based Business Loans should then appear in your bank account in anywhere from 1-2 business days. For SBA Loans, it usually takes 3-5 weeks to receive funding.
Your Business Financing Gets Set Up – Now What?
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all of your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
What If I’m Declined For a Beauty Salon Business Loan?
If your application is declined, it might be because you applied for the wrong product for your cash flow. In this case, we would likely recommend a different product with a less hazardous repayment structure.
We might also decline your application after determining that you cannot afford to take on more debt at this time. Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or even a personal loan. Both options can be accessed through UCS and are usually much easier to qualify for than business loans.
If your credit score is your main obstacle for access to financing, you should consider our credit repair services. We can help you identify the issues that are keeping your score down and develop practical solutions for eliminating them.
People Also Ask:
What Types of Beauty Salons & Spas Can Get Business Loans?
Business loans are available for all sorts of salons, including (but not limited to):
- Hair salons
- Nail salons
- Massage studios
- Tanning studios
- Waxing/hair removal centers
- Facials/skincare treatment centers
How Do You Qualify for Beauty Salon Business Loans?
This depends on where you apply and the product you have in mind. If you’re looking for a bank loan, you’ll need excellent credit, perfect cash flow, collateral, plenty of money in the bank, high annual revenue, and at least two years in business.
Products from companies like United Capital Source are much more accessible. Your ability to meet the requirements mentioned above will determine your borrowing amount, rates, and terms. But falling short in any (or more than one) of these areas won’t stop you from qualifying for multiple products. With some products, your credit score is practically irrelevant. For example, eligibility for a Merchant Cash Advance is based entirely on the size and volume of your debit and credit card sales.
What Are The Best Business Loans for Beauty Salons?
For some salons, their biggest challenge is the constant need for new equipment or supplies. For others, it’s the ups and downs in demand or the post-holiday slump. A Business Line of Credit can solve both of these common dilemmas. This is the perfect business financing tool for businesses that face sporadic and unpredictable cash flow issues. You can draw from your credit line at any time, and once you pay back what you borrow, that money becomes available again. Thus, you don’t have to continuously apply for funding whenever demand drops or a new expense arises.
A Business Line of Credit is best for businesses that need a little extra cash here and there instead of companies looking to finance large-scale investments.
Do Beauty Salon Business Loans Require Collateral?
The only Beauty Salon Business Loan that typically requires collateral is Equipment Financing. You would be using the equipment as collateral to borrow an amount roughly equal to the equipment’s value. And when we say “roughly,” we mean “slightly lower.” After all, the business loan provider probably won’t sell the collateral for the same amount in which it was purchased. For this reason, $10,000 worth of collateral might be able to get you a $6,000 – $7,000 loan.
While collateral is not required for the other options, providing it may offset issues with credit or cash flow that would have otherwise resulted in higher rates or lower borrowing amounts. But, before assuming you can provide collateral, contact the business loan provider to make sure your type of collateral is accepted.
Can I Get a Beauty Salon Business Loan With Bad Credit?
Yes, five out of the seven products mentioned above are accessible for borrowers with bad credit. Your rates may be higher, and your terms may be shorter because bad credit makes you more likely to default. However, if you have strong cash flow or can provide collateral, your bad credit may have less impact on your rates and terms.
The only two products that are not accessible with bad credit are Business Term Loans and SBA Loans. These products carry high borrowing limits, low rates, and long terms. The other five products usually carry shorter terms and are much easier to repay. We can also customize your terms and payment frequency to ensure that you can make payments while staying current on other bills.