Article Summary:

• Beauty salon loans are available in Georgia.
• Salon owners can get term loans, lines of credit, or SBA loans.
• Interest rates and repayment terms affect the cost of borrowing.

The Dos & Don’ts of Salon Financing

According to a Statista analysis, Georgia beauty salons are projected to earn $758 million in revenue in 2024. Salon owners looking to gain a part of that may need to focus on their business needs. Whether that’s solving cash flow issues, expanding, or staying up-to-date with the salon industry, you likely need extra money to accomplish your goals. If you need business financing, beauty salon loans are available to help. But borrowing is still a major responsibility, so here are the dos and don’ts of taking out a salon business loan.

Do: Invest in Your Beauty Salon

The beauty salon business can be volatile. Sometimes you might be booked and doing well, while other times you’re experiencing a lull and still need to pay operational expenses. To ensure your skills and salon stay competitive, you need to invest in your beauty salon.

That might mean taking out a loan for a beauty parlor and updating your space. For example, having the right mirrors and chairs could make a major difference in client experience. It could mean using that money for startup costs to get equipment or new technology. Whatever you need to keep your hair salon afloat and thriving, is a good investment.

Don't: Skip the Research

If you need fast business funding, it’s easy to say yes to the first type of beauty salon financing you come across. However, to ensure you’re making a smart investment don’t skip the research part.

Evaluate a range of lenders and compare the interest rates and repayment terms. Additionally, make sure you meet the eligibility requirements. Traditional banks tend to have more firm requirements. Alternative lenders generally have more flexibility.

Do: Have a Business Plan Before Taking Out Beauty Salon Loans

Having an official business plan is important. This is not just for you to follow, but for prospective lenders. If you’re looking into beauty salon loans in Georgia, a business plan can show that you know what you’re doing and could help you during the application process. Lenders look at multiple risk factors when approving or denying a candidate. You want the best shot at approval, so having all your ducks in a row can help.

If you don’t have an official business plan or yours needs an update, the Small Business Administration (SBA) has some resources to help.

Don't: Be Disorganized

The last thing you want to do when looking into financing options is to be disorganized. When you submit a loan application, lenders will ask for supporting documentation which can include:

• Profit and loss statements
• Business tax returns
• Business license
• Local permits
• Business plan
• Bank statements
• Financial statements

Having your business paperwork in order can make applying for a loan for a beauty salon simpler and less stressful.

Do: Choose the Right Beauty Salon Loans

Beauty salon owners in Georgia can look into various funding options. Depending on your business needs, credit history, and annual revenue, some beauty salon loans may make more sense than others. Here’s an overview of common types of beauty salon financing.

• Term loans. This option can be appealing as you get a lump sum and repay it over a set term. Online lenders and banks offer this type of business financing, which can be your beauty salon loans.
• Equipment financing. As the name suggests, equipment financing helps you purchase equipment. What this means can vary by business, so salon equipment could mean buying chairs for your waiting room, styling chairs, brushes, hairdryers, and other items to help you keep up with beauty industry standards.
• Business line of credit. When you get a business line of credit, you don’t get a lump sum upfront. Rather, you get approved for a limit and can use up to that amount. So if you need to borrow less, only access the funds you need now. If you need more funding, you can pay back your line of credit to access the rest of your available credit.
• Business credit cards. Though credit cards aren’t exactly beauty salon loans, they can provide funding quickly if you need it. However, using your business credit card isn’t ideal if you can’t pay your balance. This can be an accessible option in the short term but can cost you a lot due to higher interest rates. You may qualify for lower interest rates with another type of loan.
• SBA loans. The Small Business Administration or SBA offers different loan options, based on your needs. You can look into microloans, SBA 7(a) or 504 loans. What’s great about SBA loans is that the agency backs a portion of what you borrow. So the lender doesn’t have to deal with as much risk and borrowers have more access.

Don’t: Think Short-Term Only

Whether you want to improve an existing salon or launch a new one, you might need a small business loan quickly. As noted above, depending on the type of financing, you can get that. But you don’t want to only think short-term. Business owners must think long-term as well for the viability of their business. Consider how the following will impact managing your salon:

• Monthly payments. When you take on a specific loan amount, understand what your monthly payments will look like. Consider how this additional expense will affect your cash flow now and in the future.
• Credit impact. In many cases, your personal credit score and history will be reviewed to determine your eligibility for a loan. A business loan can be a smart way to build business credit. But if your personal credit is on the line and you miss a payment, your credit score could drop. That can affect your future interest rates or ability to get approved for credit or a loan.
• Interest charges. All borrowers pay interest for the convenience of getting money upfront. But how much you pay depends on the interest rates. Look at the APRs on the beauty salon loans you’re looking into and calculate total interest charges using an online calculator. The extra costs can be significant.
• Repayment terms. How long you have to repay your business loan depends on the repayment terms. It could be a couple of years or longer. The length of time affects your monthly payments and interest. You want a term that ensures you can comfortably repay the loan.

Final Thoughts on Beauty Salon Loans

Georgia entrepreneurs with a salon have a range of financing options to help accelerate their business. If you’re in that boat, these options can help you continue serving others and building up your enterprise at the same time. If you follow these dos and don’ts, you can find the best beauty salon loans for your situation.

FAQs about Beauty Salon Loans

How Much Money Does It Cost To Open A Salon?

The cost of opening a beauty salon depends on your location, size, equipment, and more. However, the cost can typically range from $60,000 to $130,000.

How To Finance A Beauty Salon?

Beauty salon loans can help you finance your business. You can get a lump sum term loan, line of credit, or SBA loan.

How Do I Write A Financial Plan For A Salon?

To write a financial plan for a salon, include projected costs and sales forecast while reviewing your profit and loss statement.

Is Owning A Beauty Salon Profitable?

Owning a beauty salon can be profitable, but it can take time and commitment. Building up your client base, getting your name out there, and charging market rates can help.

What Does a Beauty Salon Include?

Depending on the type of establishment, a beauty salon may include hairstylists, cosmetologists, manicurists, and more. Before opening a salon in Georgia, do market research in your area.

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