Owning a hair salon or barber shop is a popular way for entrepreneurs to make money. In 2023, there were over 942,000 hair salons in the U.S., with an average revenue of $245,000. If you're looking to open a barber shop or hair salon in Georgia, you'll need to purchase hair salon equipment to service your customers. Learn about operating a salon and the equipment you'll need, how to get a salon business loan, and what financing options are available.

Options for Opening a Hair Salon or Barber Shop

Whether you're launching your business in Georgia or elsewhere in the U.S., most hair salons and barber shops operate the same way. You can either set up your own shop, buy an existing hair salon, or rent a space in someone else's salon. Mobile beauty salons are also on the rise as consumers prefer the convenience of having the salon come to them at their home, business, or another location.

Georgia requires hair salons and barber shops to have a license to operate in the state, including those that operate out of a home or at a flea market. The non-refundable application fee of $75, plus a processing fee of $5 when submitted online or $10 through the mail, applies when opening a new salon or shop or if you buy an existing location. You must renew your license online each year and pay a fee of $75.

Business owners must also obtain a business license from their local city or county and pay those fees.

What Hair Salon Equipment Do You Need?

The type of hair salon equipment and number of pieces varies depending on the size of your hair salon. If you're renting a space, most of the large equipment is already provided. However, when opening a modern salon, there's a variety of hair salon equipment you need to buy. Here's a short list of the hair salon equipment that should be on your shopping list:

• Hydraulic reclining barber chair/salon chair for each salon station
• Styling stations with salon styling chair and LED mirror
• Shampoo stations require shampoo chairs and a shampoo bowl
• Spa equipment
• Beauty salon trolley rolling cart
• Anti-fatigue barber station mat
• Hair dryer, hard hat dyer, and dryer chairs
• Hair color mixing bowls and processing caps
• Curling and straightening irons
• Hair stylist combs and brushes
• Hair cutting scissors and capes
• Cosmetology and esthetician supply and pedicure chairs
• Reception desks and cash register or point-of-sale terminal for checkout
• All-purpose chairs, reception chairs, and other salon furniture

You may be able to save money by buying used equipment. The hair salon industry has a failure rate of 50% within the first three years, which means that many closed salons are selling their equipment to raise cash.

Ongoing costs of running your hair salon include rent, utilities, insurance, credit card processing fees, business licenses, marketing & advertising, and staff wages. Additionally, you'll need to stock up on beauty supplies to use on customers and to have them available for sale.

Do You Need to Hire Employees?

The hair salon industry employs more than 1.3 million people in the U.S., while there are almost 160,000 people in the barber shop industry. The average U.S. hair salon has 1.4 employees, but since the average stylist makes $30,000 annually, many hair salon and barber shop owners start small before hiring anyone. This allows them to build a following that ramps up their business before hiring or purchasing more hair salon equipment.

How to Pay For Hair Salon Equipment

To open a hair salon or barber shop, you'll need money to purchase hair salon equipment and cover your expenses while building up your revenues. Here are the most common ways to fund your new business, including getting a loan for salon startup costs and working capital.

SBA Loan

Loans backed by the Small Business Administration (SBA) are available from banks, credit unions, and other lenders. The Federal government insures these loans to encourage banks to lend to small business owners and entrepreneurs.

SBA loans are available from $500 to $5 million to fund working capital, equipment (including hair salon equipment), buying a business, or purchasing a building. Depending on your financing needs, you may be eligible for a microloan of $50,000 or less or a 7(a) loan for salon equipment, supplies, and ongoing expenses.

Traditional Bank Loan

Banks typically offer loans to existing business owners, but they may provide a salon business loan for entrepreneurs with experience in the industry. The application process usually focuses on the business income, expenses, and profitability over time. You'll need to prepare a business plan that details how the money will be used, including buying hair salon equipment, operating expenses, employees, and other costs. The bank underwrites the loan based on the hair salon's ability to repay its profits and cash flow.

Equipment Financing

You may use equipment financing for specific items when buying hair salon equipment for your salon or barbershop. This limits your exposure and the amount of debt that you'll incur. With equipment financing, you'll choose between a loan or a lease. Loans have fixed monthly payments, where you own the equipment once the balance is paid off. Leases are more like renting. You'll make regular monthly payments but don't own the assets. At the end of the lease, you can either return the hair salon equipment or pay a residual (typically $1 or a percentage of the asset's initial purchase price) to own the equipment.

Merchant Cash Advance

Merchant cash advance financing provides a lump sum of money upfront that is repaid as you collect customer payments. This form of financing uses smaller, more regular payments (daily, weekly, or semi-monthly) rather than traditional monthly payments. You can use credit card sales or other business receipts to secure this loan for your salon or barber shop.

Buy Now, Pay Later

Another financing option for salon and equipment in Georgia that is gaining popularity is "buy now, pay later" (BNPL). You’ll find this payment method from companies like Klarna, Affirm, and PayPal. Many stores that sell hair salon equipment offer immediate financing for purchases that split repayment into equal weekly, bi-weekly, or monthly payments.

While these loans are often easy to get, they can quickly overwhelm your finances as the payments consume more significant portions of your income. BNPL loans typically don't have interest charges, but late payments and other fees can cost more than interest on other types of loans.

Personal Savings and Credit

Many aspiring entrepreneurs use their savings and credit to fund the launch of their business. They'll buy supplies, hair salon equipment, and other purchases using as much cash as possible, then borrow for additional items. This helps to avoid going too far into debt and unnecessary credit inquiries. Banks typically require personal guarantees on business loans, so using personal credit often has the same impact on a business owner's personal finances.

Personal credit may take many forms, including credit cards, personal loans, or tapping your home equity. You can get money from your home's equity by doing a cash-out refinance, home equity loan, or a home equity line of credit (HELOC).

Private Investors

Getting private investors to lend money or invest in your business can limit your exposure in cash if the business fails. Private investors range from friends and family to accredited investors like angel investors, private equity (PE), or venture capitalists (VCs). Professional investors typically avoid providing a loan for salon equipment and working capital due to the smaller nature of this type of business.

Crowdfunding Platforms

Crowdfunding platforms like Kickstarter offer a way for anonymous investors to provide investments or loans to a salon or other types of business. Typically, investors make small investments based on your credit profile, the spersonal loans

ize and terms of the investment, and a short description of how the money will be used.

When using a crowdfunding site, you'll set a funding goal. Upon reaching your goal, you'll receive the cash. If your loan goal isn't met, the money may be returned to investors instead of funding a partial loan for salon equipment and working capital.

Frequently Asked Questions

How do you finance a salon?

Entrepreneurs have a variety of financing options when opening a salon. Common funding sources include SBA loans, bank loans, personal credit and savings, equipment leasing, merchant cash advances on future sales, and private investors. Each funding source has pros and cons, so consider your options before choosing how to finance your business.

What is business equipment financing?

Business equipment financing is a specialized loan that enables business owners to buy equipment today and pay it off over time. You have many options to finance your business equipment, including term loans, a line of credit, leasing, and merchant cash advances. Many loans are secured by the equipment being financed, but not all require collateral.

How much capital do you need to start a salon?

The amount of money needed to open a salon or barbershop depends on its location, size, and other factors. In Georgia, you should expect to spend between $60,000 to $500,000 to open your business. These amounts include tenant improvements, hair salon equipment, supplies, and other necessities for your salon.

How hard is it to get equipment financing?

You have excellent odds of getting approved for hair salon equipment financing if you have good credit and a reliable source of repayment. The equipment typically secures these loans, so if you default on the loan, the lender can repossess the equipment.

What is the average interest rate for an equipment loan?

Average equipment loan interest rates typically range between 7% and 20% but will vary based on lender and qualification requirements. They're determined by a variety of factors, including your credit score, the loan term, and what you are buying. Borrowers with higher credit scores and consistent profits may be able to get approved for the best rates and terms.

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