Small Business Loans For Beauty & Nail Salons

Whether you’re the owner of an established beauty salon or it’s your dream to open your own nail spa, one thing is clear: your business needs money. As the old saying goes, it takes money to make money, but what happens when the money’s just not there?

If you’re the owner of a beauty or nail salon and you need money to grow your business (or you’re ready to get your business off the ground), consider a small business loan as one of your best resources. With a small business loan, you can pay your business expenses, tackle that unexpected emergency, or expand your customer base with a new marketing campaign.

No matter what your needs, a small business loan has you covered. Before diving into the application process, know what to expect, the kinds of loans you’ll encounter, and which type of loan works best for your business. Read on to learn more about the options available to you to start or expand your beauty or nail salon.

Equipment Purchasing

Your beauty salon equipment is outdated and desperately needs to be upgraded. Your nail salon is booming, and you need to purchase more stations and equipment to better serve your customers.

This equipment comes at a cost — a cost that your business may not be able to afford.

If you need to purchase equipment but don’t have the money to buy it outright, there’s a financing option. Instead of draining your bank account, consider equipment financing.

Equipment Financing

Equipment financing is a simple concept. A lender provides you with the money you need to purchase equipment. This allows you to take possession and put the equipment into use immediately. Because the lender provided the funds, you don’t have to pay the full equipment costs out-of-pocket. Instead, you’ll be able to pay back the loan through affordable scheduled payments.

Equipment financing can only be used toward the purchase of equipment for your business. For beauty and nail salons, this could include hair dryers, stylist chairs, or a point-of-sale system. Rates, terms, down payments, and loan amounts are based on creditworthiness. Most lenders look for credit scores in the high 600s, although some will accept lower credit scores. High-risk borrowers may be required to put more money down or pay higher interest rates.

Recommended Option: Lendio

Lendio is a loan-matching service that connects you to over 75 business lenders. Through Lendio, you can receive offers from multiple lenders with just one application. This cuts down on the amount of time you’ll spend shopping for a loan while ensuring you receive the best offers.

Lendio offers equipment financing for business owners. Other loan products offered through Lendio’s network include term loans, SBA loans, lines of credit, and business credit cards.

For Lendio’s equipment financing programs, all borrowers must be in business for at least 12 months, bring in at least $10,000 per month in revenue, and have a credit score of 650.

Equipment loans of up to $5 million are available, with repayment terms between 1 and 5 years. Interest rates start at 7.5% for the most qualified borrowers. Fees vary by lender, and the equipment being financed typically serves as the collateral.

Business Expansion

Your business and customer base are growing so much, it’s time for your salon to expand. Maybe you want to build an addition to your existing salon, or you want to purchase commercial real estate to open a new location. While business expansion means that your business is growing, it also means additional expenses.

Most business owners don’t have the means to fund expansion expenses out-of-pocket. Even if they do, tying up such a large amount of their capital isn’t always the wisest move. Luckily, you don’t have to worry about taking on this burden by yourself. With a Small Business Administration loan, you’ll be able to break large expenses into smaller, more manageable monthly payments.

SBA 7(a) Loans

The Small Business Administration offers multiple loan programs, but the 7(a) loan is one of the most popular. With high loan limits, flexible repayment terms, and low interest rates, it’s easy to see why this is a top choice for qualified business owners.

The SBA 7(a) loan can be used for almost any business purpose, including business expansion. You can update your existing salon, purchase commercial real estate, or fund any other business expense with this loan.

SBA 7(a) loans are available in amounts up to $5 million. Repayment terms are 10 years for most purposes and maximum terms of 25 years are available for commercial real estate purchases. Interest rates are set at the prime rate plus a maximum of 4.75% based on the amount of your loan and repayment terms.

SBA 7(a) loans are typically reserved for the most qualified borrowers. To qualify for SBA loans, you must have a credit score in the high 600s and meet the SBA’s definition of a small business. Your credit report must be free of liens, collections, recent bankruptcies, and foreclosures. If you’ve previously defaulted on a government loan, you will not be eligible. Your business must be in an approved industry, based in the U.S., and have a time in business of at least 2 years.

Recommended Option: SmartBiz

The process for receiving an SBA loan is notoriously long. Some borrowers wait months just to get the funding they need. SmartBiz is a lender that simplifies the process.

SmartBiz offers SBA commercial real estate loans from $500,000 up to $5 million. Interest rates are 6.75% to 8% with repayment terms up to 25 years. Working capital loans up to $350,000 are available with fees between 8% and 9% and repayment terms of 10 years.

SmartBiz charges several fees for obtaining an SBA loan, including referral fees, packaging fees, guarantee fees, and closing costs. Collateral may be required to receive your loan. Loans can be funded in as quickly as seven days through SmartBiz.

Supplies & Inventory Purchasing

There are critical supplies you need for daily business operations, not to mention customer inventory — like shampoo, hair brushes, nail polish, etc. — that helps bring in additional revenue. When you don’t have the supplies you need, you’re unable to perform the services that customers seek. When your inventory is depleted, you’re missing out on this additional revenue stream.

Whether you’re running low on supplies and inventory or you forecast a seasonal increase in the near future, there comes a time when you need to replenish your stock. If you’re not in a financial position to pay cash for supplies and inventory, consider applying for a business line of credit.

Business Line Of Credit

A business line of credit is a type of revolving credit that can be accessed as needed. Once approved by a lender, you’ll be given a credit limit. You can make multiple draws on your account, so you can receive the money you need right when you need it.

With a business line of credit, interest or fees will be charged only on the used portion of funds. As you repay your loan through weekly or monthly payments, these funds will become available for you to use again.

Lines of credit are available for most salon owners, regardless of credit score. While some lenders have credit score requirements, others base their approval decision on the performance of the business. Most lenders have time in business limits typically between 6 and 12 months, but there are some lenders that do not have minimum requirements. Annual revenue requirements are between $50,000 and $100,000 to qualify for most business lines of credit, but again, certain lenders do not have requirements in place.

Recommended Option: Fundbox

Fundbox is a lender that provides lines of credit up to $100,000. To qualify, a borrower must have at least two months of activity in an accounting software app supported by Fundbox. If the borrower is unable to meet this requirement, bank statements showing transactions over the last three months can be submitted.

There are no credit limit requirements to qualify for a Fundbox line of credit. The application process is quick and easy, and an approval can be given in just minutes. Once approved, funds are available for immediate withdrawal and are typically transferred as soon as the next business day.

Fees for using Fundbox begin at 4.66%. Repayment terms are set at 12 or 24 weeks, and there are no prepayment penalties.

Emergency Funding

It happens to the best of us: an unexpected expense. If an emergency arises, even the most financially responsible salon owner can be taken by surprise.

If you’re facing a financial emergency, don’t panic. Take a deep breath and know that there are options for getting over this financial hurdle. Read on to learn why a business credit card can be a critical resource in these stressful situations.

Business Credit Cards

A business credit card is just like a personal credit card, except it is used to cover business expenses. Once you’re approved for a credit card, the lender will set a credit limit. You can use the card as often as you wish anywhere credit cards are accepted, up to your assigned credit limit.

Credit card payments are due each month and will be applied toward the principal balance and the interest charged by the lender. As you pay back borrowed funds, they become available to use again.

A credit card is helpful during emergencies because you don’t have to wait for approval from the lender. If you’ve already received your card, you can use it as needed for any business expense, from covering operating costs to purchasing supplies. Credit cards can even be used for recurring expenses month after month.

With responsible use, a credit card can not only help you cover unexpected expenses but can also lead to great rewards. Many lenders offer rewards programs with their credit cards. Just by using your card, you can earn points with every qualified purchase that can be redeemed for cash or other perks.

Recommended Option: Chase Ink Business Cash

If you have good to excellent credit, you can qualify for the Chase Ink Business Cash card. This card comes with no annual fee, an introductory APR of 0% for the first year, and variable APRs of 15.24% to 21.24% after the introductory period.

With this card, you can receive 5% cash back on the first $25,000 spent toward internet, cable, and phone purchases, as well as office supply store purchases. You’ll receive 2% on the first $25,000 spent at restaurants and gas stations and 1% cash back for all other purchases.

When you sign up for this credit card, you can receive $500 cash back just by spending $3,000 or more within 3 months of opening your account.

Unsure if this is the right card for you? Learn more about other Chase Ink credit cards for your business.

Marketing & Advertising

Customers are critical to the success of your beauty or nail salon. Without customers, you don’t have a business. While you may already have clientele, a growing business always needs more customers. To bring in these customers, marketing and advertising is critical.

Sure, you could rely on your social media presence alone, but if you really want to expand your business, you’ll need to launch a marketing and advertising campaign. If the cost of marketing and advertising is holding you back from growing your business, consider applying for a short-term loan to make this expense more manageable.

Short-Term Loans

A short-term loan is a loan for a specific amount of money that is paid back through smaller scheduled payments over a set period of time. While most short-term loans have repayment terms of one year or less, some lenders offer terms up to three years.

Most short-term loans don’t have an interest rate. Instead, these loans have a fee known as a factor rate. This multiplier is used to determine a one-time cost that is added to your loan.

Because short-term loans are for a specific amount, it’s important that you plan out your expenses to make sure you receive enough money. Do your research, calculate pricing, and form a plan for your marketing and advertising campaign before applying for a short-term loan.

Short-term loan requirements for time in business and annual revenue vary by lender. Your personal credit score will be considered, but scores in the 500s are accepted by some lenders. Borrowers with the best credit scores will be approved for higher loan amounts with lower fees and rates and better terms.

Recommended Option: Credibly

Credibly provides short-term loans of up to $400,000 for eligible borrowers. Repayment terms are available for 6 to 18 months. Factor rates for the most qualified borrowers are as low as 1.09. A one-time origination fee of 2.5% of the total loan amount is charged by the lender. Credibly payments are made daily or weekly.

To qualify, borrowers must have a minimum credit score of 500. All borrowers must have been in business for at least 6 months and have at least $15,000 per month deposited to their bank accounts.

In addition to its short-term working capital loans, Credibly also provides business expansion loans and merchant cash advances.

Cash Flow

As a salon owner, it’s not uncommon to experience periods where business is slower than usual. Even when your cash flow slows down, you still have expenses … and this can be a problem.

Fortunately, a cash flow loan can provide you with the money you need to fill in these gaps. Whether you need funds to meet payroll or money for daily operating expenses, a cash flow loan can provide you with the capital you need when business slows down.

Cash Flow Loans

A cash flow loan provides you with the money you need when your cash flow has slowed. These funds are used to pay your expenses to keep your business running as it should.

There are several types of cash flow loans available. If you know the specific amount of money that you need, a term loan is a good choice. With this type of financing, you receive a lump sum and repay the loan, plus interest, through regular installments.

A line of credit is another type of cash flow loan. These loans are best for businesses that may have recurring expenses that require multiple draws.

Qualifying for a cash flow loan requires a minimum credit score of 500. Time in business and annual revenue requirements vary by lender.

Recommended Option: StreetShares

StreetShares is a lender that offers multiple loan options to small- and medium-sized businesses. Term loans and lines of credit are available in amounts up to $250,000 with repayment terms up to 36 months. Contract financing is also available.

To qualify for a StreetShares loan, a business must be in operations for at least one year with minimum revenue of $25,000 per year. A credit score of at least 620 is required for all borrowers.

Starting A Salon

While we’ve addressed common financial challenges you’ll face when expanding your salon, what if you aren’t yet at that point? What if you’re the new business on the block, and you need extra money to really get your endeavor off the ground?

If you’re looking for money to start your own beauty or nail salon, qualifying for business loans can be difficult. However, it’s not impossible to receive the money you need to open your own salon if you know where to look. The first place to start is with a startup loan.

Startup Loans

A startup loan is a loan that is used to pay the expenses associated with starting a business, such as hiring employees, buying or leasing real estate, or purchasing equipment like POS systems and software.

For most startup loans from alternative lenders, a minimum credit score of around 600 is required. Interest rates are based on the borrower’s personal creditworthiness.

Some lenders require a minimum time in business. If this is a requirement, another option that can be considered is a personal loan. A personal loan can be used to fund startup costs and may come with a lower interest rate for borrowers with a solid credit profile.

Recommended Option: BlueVine

BlueVine is an alternative lender that provides lines of credit up to $5 million for new businesses. Repayment terms of 6 months are available through BlueVine. The APR for receiving this financing is 15% to 78%.

To qualify, borrowers must be in business for at least 6 months. A minimum credit score of 600 and $120,000 in annual revenue is required to receive BlueVine’s line of credit. The application process is easy, there are no hidden fees, and lines of credit are funded quickly.

Bad Credit? Your Best Financing Options

The best business loans require high credit scores, so does that mean you’re left out in the cold if your credit history isn’t where it needs to be? Actually, there are financing options available for you if you have bad credit, but you should be aware that these loans come with higher interest rates, lower borrowing amounts, and a possible need for collateral.

Before applying for a loan, you should always know your credit score. You can obtain your free credit score quickly and easily online. Once you have your score, you can get a better idea of the types of loans available to you.

The best options for borrowers with bad credit are lines of credit, equipment financing, and short-term loans. These financing options typically have lower borrower requirements — including credit scores — than other loans.

Business credit cards are also a great choice for borrowers with poor credit. There are unsecured options available to borrowers with lower scores. Anyone that doesn’t qualify for an unsecured card can receive a secured card backed by a security deposit. After making several on-time payments, the borrower can build their credit and qualify for better financing options.

Bad credit limits your lending options and results in a higher overall cost for loans. If your funding need isn’t immediate, your best move is to take steps to raise your personal credit score. Although this option takes time, you’ll receive better loan offers that are more affordable for your business.

If you need financing urgently before you can build up your credit, consider applying for the Capital One Spark Classic business credit card. This credit card is available to borrowers with scores as low as 580.

With this credit card, you’ll be able to receive unlimited 1% cash back rewards on all purchases. Because this card is designed for borrowers with lower credit scores, the APR is fairly high at 24.74%. However, there is no annual fee, and Capital One reports to multiple credit agencies, allowing you to build your credit (provided you make your payment on time each month). As your credit score rises, you’ll be qualified to apply for business credit cards and other loan options with lower interest rates and better terms.

What You Need To Apply For Beauty & Nail Salon Business Loans

What you need to apply for a beauty or nail salon business loan varies based on the lender you work with and the type of loan you’re seeking. For example, a business credit card application typically requires some basic information, including your business name, federal tax ID number, annual revenue, social security number, and contact information.

For other financial products, such as SBA loans and startup loans, more extensive documentation is required. This includes but is not limited to:

• Personal Financial Statements
• Business & Personal Tax Returns
• Balance Sheets
• Income Statements
• Profit & Loss Statements
• Bank Statements
• Future Financial Projections
• Owner Resumes
• Business Licenses

Requirements vary by lender, so once you’ve chosen a lender, make sure you discuss what documentation and information are required. Make yourself available throughout the lending process to provide more information as needed. Learn more about small business loan requirements before you apply.

Final Thoughts

It’s common to encounter financial hurdles while growing your salon, which is when taking out a loan just makes sense. By doing your research and becoming a responsible borrower, you’ll be able to boost and expand your business without clearing out your checking account. That’s the beauty of small business loans.