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Starting or expanding a beauty salon can be expensive. In addition to paying rent and deposits, there are other costs associated with salons, such as installing sinks and furnishing stylists’ booths. There are also many additional fixed and variable monthly costs (insurance, utilities, etc.).
Over time, a beauty salon builds a loyal clientele from nearby residents and businesses because of its convenience, reputation, and high quality stylists.
An SBA loan can help get your beauty salon off the ground or expand an existing salon. In addition, it can be used to buy new furnishings, purchase another beauty salon, and for many other purposes.
Benefits of owning a beauty salon
The biggest benefit of owning a beauty salon is having other stylists help pay for your salon’s overhead through booth rental fees. Depending on your salon’s location, the weekly rental can start at $250 or more.
Owning a beauty salon also means you’ll have independence. You’ll be an independent business owner who can set your own hours, rent space to stylists you choose to work alongside, and enjoy the many tax deductions associated with owning your own business.
How to obtain financing to open, expand, or buy a beauty salon
If you’re looking for beauty salon financing, consider applying for an SBA loan. The various loan programs offered by the Small Business Administration can help provide the funding you need to set up your salon.
The SBA is a government agency that doesn’t lend you the money directly. Instead, it guarantees a significant portion of your loan. That lowers the risk profile for SBA’s lending partners, which include conventional banks and financial institutions, so they’re more willing to approve loan requests.
You also must put significantly less cash or equity down to qualify with an SBA loan. And, with an SBA loan, no covenants or collateral is required.
The most common SBA beauty salon loans include the SBA 7(a) and Express loans.
SBA 7(a) loan for starting or buying a beauty salon
The 7(a) is the preferred SBA loan for beauty salons. You can use the funds made available through this program to start a new salon, expand your current location, or even buy another salon.
If you own an existing beauty salon and want to buy out a partner, you can also utilize the funds from an SBA 7(a) loan for that purpose.
The maximum SBA loan for a beauty salon is $5 million and is generally repaid with monthly payments that include interest.
The payment stays the same for fixed-rate loans since the interest rate is locked in. However, for variable rate loans, it’s up to the lender to request a different payment amount if the interest rate changes.
SBA Express Loans for beauty salons
SBA Express Loans are a part of the agency’s 7(a) loan program. Up to $500,000 can be borrowed under an Express loan. The approval times are typically much faster for these loans.
Express loans over $25,000 have a collateral requirement. The SBA usually responds to Express loan applications within 36 hours.
The lenders ultimately make all eligibility and credit decisions. The market prime rate plus 4.5-6% interest is applied with repayment terms of up to 10 years.
How to apply for an SBA beauty salon loan
Access our network of SBA lenders that includes leading nationwide banks, credit unions, and other financial institutions. Our lending partners are experienced in handling applications for beauty salons, so they will diligently pursue your opportunity.
There are countless SBA approved lenders that are ready to offer you a beauty salon SBA loan. These are just some of the top lenders:
| Rank | Bank | City | State | # of Loans | Avg Loan $ | Avg Interest |
|---|---|---|---|---|---|---|
| 1 | The Huntington National Bank | Columbus | OH | 72 | $148,469 | 6.6% |
| 2 | U.S. Bank | Cincinnati | OH | 34 | $156,729 | 6.8% |
| 3 | Readycap Lending, LLC | Berkeley Heights | NJ | 30 | $93,187 | 8.7% |
| 4 | TD Bank | Wilmington | DE | 27 | $37,837 | 9.2% |
| 5 | Newtek Small Business Finance | Lake Success | NY | 17 | $232,094 | 8.6% |
| 6 | Wells Fargo | Sioux Falls | SD | 16 | $36,656 | 9.7% |
| 7 | M&T | Buffalo | NY | 15 | $66,400 | 8.1% |
| 8 | Celtic Bank | Salt Lake City | UT | 13 | $154,438 | 8.2% |
| 9 | BancorpSouth Bank | Tupelo | MS | 10 | $220,200 | 7.6% |
| 10 | BayFirst National Bank | Saint Petersburg | FL | 9 | $139,722 | 8.4% |