Business Loans for Beauty & Nail Salons
Updated September 08, 2022
Beauty salons provide a phenomenal entrepreneurial pursuit that enable beauticians to apply their artistic skill, while building a reliable business with ample growth potential. Beautician work is one of the few career paths that rarely suffer amid economic recessions, making it an ideal investment choice for savvy entrepreneurs. In order to make your beauty salon stand out from others on the block, generous startup capital is critical. The right loans for small business will allow you to launch a chic and enticing salon that provides a sophisticated ambiance for clients.
Crowdfunding is a new and highly effective method of raising startup capital. Through CrowdFunding, you pitch your business proposal to millions of users on Internet-based platforms, like Kickstarter or Indiegogo. People peruse the site in search of business ideas that resonate with them and invest in the businesses of their choice. The capital is raised through pre-selling your products or services, enabling investors to gain privileged access to the product the moment it’s released.
This creates a mutually beneficial service that guarantees businesses the startup funds they need, while providing investors first access to the product. Beauty salons can either offer beauty products or pre-book appointments as compensation to investors. CrowdFunding not only helps to establish startup capital, but it enables you to pre-market your business so that by the time you launch, you’ve already gained the attention of a wide network of consumers. Additionally, the investments are interest-free, creating a cost-effective alternative to traditional loan options.
Working Capital Loans For Beauty & Nail Salon
Working capital loans provide rapid money options for businesses. Average approval time of applications is around 48 hours, enabling you to get the funds you need right away. They typically come with short-term payment plans, which allow you to pay the money back quickly without accruing years of debt. Working capital loans are generally issued for smaller financing needs and can help to fill cash-flow gaps as needed.
Micro-loans are small loans that are generally offered through non-profit or government-backed organizations. These organizations seek to strengthen the economy and reduce unemployment by encouraging entrepreneurial pursuits among all demographics. As such, these loans are easily attainable by new business owners who lack business credit. Micro-financing agencies engage in a higher level of risk by investing in new entrepreneurs, and they issue their loans at high interest rates to compensate. Even so, this provides a viable option to budding beauty salons.
The Big Banks
Since the downturn in the economy in 2008, banks began to focus more on big business needs. According to Forbes.com, most small businesses, like salons, don’t meet the tough lending criteria and owners who have less than perfect credit are being forced to seek funding outside of the bank.
The challenges include:
- Banks often consider a salon business a high risk. In turn, they demand collateral, guarantees, and good credit to qualify.
- Traditional banks typically will decline a loan if your business records demonstrate decreasing sales, low cash flow, or if you lack collateral or a significant amount of managerial experience.
- If your business is new, or a start-up, approval can be almost impossible to get. According to Foxbusiness.com, many banks turn away requests for a start-up loan because they require three years of business financial data to be provided.
- The application is typically rigorous. A very detailed business plan is required as well as analysis of your competition and your marketing plans.
Savvy salon owners know that sometimes you need to get creative and think outside of the box. This is where alternative lenders fit into your plans.
Alternative lenders offer loans for salons that fit your business and keep your needs in mind. Interest rates may be slightly higher than a bank, but are outweighed by the benefits, which include:
- Typically, the application process examines the overall health of your business and what you have built. In other words, your credit score and length of your business history is usually not the primary focus.
- Alternative lenders often have the flexibility to offer several loan products, one of which will meet the needs unique to your business.
- Applications are usually very fast, easy and provide you the money you need quickly.
Lines of Credit
A Business Line of Credit is an option where a lender lets you borrow money up to a specified amount, similar to a credit card, but with better interest rates. You borrow only what you need from that line of credit and your interest is based upon the amount you borrow, not the full line of credit available. A Business Line of Credit is typically unsecured by any collateral and does not offer long repayment time-frames.
Why Consider Loans for Beauty & Nail Salons?
Taking out a loan for your salon operations will allow for expansion and growth. Typically you can use the capital for any reason, such as expanding your business, upgrades to your current salon, hiring more staff, specialized training classes for the staff, or to even to cover daily operations during a slump, or even to pay taxes.
All that you put into the business now are the seeds for a more successful tomorrow. For example, training classes for the staff is an indirect way hair salon business loans can help you generate revenue. Staff training is costly. But, if your staff improves their skills and learns the latest trends, clients will respond by returning for continued service and refer others to your salon. The result is increased revenues in the near future.
The right funding solution is one that understands the nature of your business and supports its growth. To learn more about loans for salons and alternative funding options, contact Credibly today!