Barber Shop Financing: Unlocking Loans and Working Capital for Your Business
February 20, 2025 | Last Updated on: February 24, 2025
By Nick Perry
Barber Shop Financing: Unlocking Loans and Working Capital for Your Business
A barber can make a big difference in a person’s life. A great haircut gives a client confidence and helps them feel their best. Professional barbers know how good it feels to make someone’s day with a clean cut, and many want to chase that dream by opening their own barber shop.
However, it takes more than skill with a razor to run a small business. Any entrepreneur needs to earn a profit to keep the doors open, and that means managing operating costs, finding new customers, and building a great staff. You might need barbershop financing to do all that. If you’re ready to become a small business owner, you should explore loans for barber shops to help you get started.
- Costs of opening a barber shop
- The best barber shop loans for a variety of business needs
- How to get a loan for a barber shop
Costs of opening a barber shop
We estimate that it costs between $50,000 and $150,000 to open a barber shop. Startup costs and cash flow needs vary depending on several factors, as they do with any new business. Some of the most important costs to consider include:
- Type of shop: Basic barber shops can be cost-effective, but if you have a certain theme, offer special extra services, or want to offer perks like TVs for patrons, costs will rise.
- Location: A barber shop on the corner in a busy metro area will cost more to buy or lease than one in a small town.
- Real estate: Choosing to buy your shop will cost more upfront and saddle you with a mortgage, but you’ll have more control over the property and the mortgage could be less expensive each month than a lease.
- Equipment: Barbers have a lot of equipment, from razors to barber chairs to brooms to sweep up hair, not to mention inventory like shampoo and styling gels, sanitizing equipment, and more.
- Licensing and regulations: Getting licensed as a barber and set up as a legal business entity and retaining counsel for potential liability or business legal issues will all cost money.
- Insurance: Business insurance premiums are typically paid upfront for the year.
- Advertising: While word of mouth is often a great, cost-effective advertising strategy for barber shops, new business owners may need to lean more on social media, print advertising, and other mediums to generate business.
A loan for a barber shop can help with most of these costs.
How can a loan for barber shops help
Most businesses are not profitable right away. Barber shops are no exception, and your business plan should account for challenges that may hamstring your success for a while. Small business financing options can help you with a lot of specific financing requirements:
- Startup costs: From licensing and real estate to equipment, inventory, hiring, and more, a loan for a barber shop can give you the capital you need to cover a range of planned and unexpected startup costs.
- Cash flow shortages: When you’re short on cash flow or working capital due to a lull in business, a short term loan for a barber shop can give you the bridge you need until business normalizes.
- Upgrading equipment and tools: A barber shop loan or equipment financing may allow you to invest in high-quality barber chairs, clippers, grooming tools, and an improved point-of-sale system to streamline appointments and accounting.
- Expansion: Whether you need a commercial real estate loan to purchase a new location or an influx of capital to renovate or grow your current space, a business loan for barber shops can help.
- Marketing: A loan for a barber shop can fund digital marketing campaigns, social media ads, and local promotions to increase brand visibility and attract new clients.
- Hire and train staff: Business financing can fund bringing on new staff members or help attract talent willing to rent a chair in your space.
Best loans for barber shops
You have many options when it comes to business loans for barber shops. There are both conventional options from traditional lenders like banks and credit unions, as well as alternative options from online lenders and other financiers.
Term loans
The most common type of business loan, a term loan for barbers provides a lump sum of cash from a lender upfront in exchange for monthly payments. With a very strong financial profile and credit score, you’ll likely get a competitive interest rate and may enjoy longer repayment terms.
These flexible loans can be used for virtually any business need and because you’re making the same payment every month based on a fixed interest rate, they’re easier to budget for.
SBA loans
The United States Small Business Administration (SBA) partially guarantees SBA loans, reducing the risk of default for lenders and incentivizing them to approve more businesses. Several SBA loan programs may be appropriate for barbers, including the popular 7(a) program and more accessible Microloan program.
SBA loans tend to have stricter qualification requirements, so it can be difficult to get them as startup loans unless you’ve previously run a business or have outstanding personal credit. They often offer the most competitive interest rates and loan terms on the market, however, so if you’re looking to expand or get an influx of working capital, it’s worth exploring these loans. They’re an excellent option for a loan for a barber shop.
Business lines of credit
Most businesses can get approved for a business line of credit. Part term loan, part business credit card, a line of credit provides a business with a maximum credit line that they may access when they need funding. This flexible loan for a barber shop allows you to withdraw money from the line when you need it, and repay it (plus interest and fees) within the loan term. Since most lines of credit are revolving, once you’ve repaid what you draw, you’ll have access to the full amount again.
Lines of credit have high interest rates, but they’re much easier to qualify for, making them good options for new businesses with rapidly evolving spending. They can also be a good source of emergency funding so long as you use them responsibly.
Equipment financing
In equipment financing, the piece of equipment you buy serves as collateral for the loan. You purchase the equipment by making payments over time, but if you fail to repay the loan, the lender may repossess the equipment. This a good loan for a barber shop that needs to purchase new equipment to get started or are looking to upgrade.
Alternative funding options
In addition to a loan for a barber shop, entrepreneurs may explore alternative financing options. Some of these may include:
- Revenue-based financing: In this arrangement, you receive an upfront loan amount and make repayments based on a percentage of your shop’s future revenue. Revenue-based financing is a good option for businesses with fluctuating income, like barber shops. You can use the cash for any business need and pay back a financier based on your business’s performance.
- Merchant cash advances (MCAs): Similar to revenue-based financing, this arrangement is made between two businesses. An MCA provider pays you an upfront sum that you must pay back as a percentage of future credit card or debit card sales. Typically, you make payments daily or weekly until you’ve satisfied a full repayment amount determined by a factor rate. It’s another flexible solution for businesses dealing with fluctuating sales.
How to get a loan for a barber shop
Getting a small business loan is just like getting a personal loan, with a few exceptions. Any potential borrower can follow this step-by-step process:
- Determine how much you need: Understanding how much money you need to meet your specific goals and how much you can afford to pay back each month will inform the type of loan you pursue.
- Shop lenders: Research is the most important stage of getting a loan. Make sure you understand eligibility requirements for different loans and lenders and speak to a loan officer to get an idea of the rates and terms available to your business.
- Gather documentation: Before you apply, make sure you know everything you need for your loan application. Lender requirements vary, but usually, you’ll need business information, financial statements, tax returns, and a business plan.
- Apply: Finally, it’s time to submit your documents and apply online or in person. Depending on the type of loan and lender, the application process may be very quick. However, it could take several weeks or even months.
Final thoughts
Getting a loan for a barber shop is a great way to bring a business vision to life. Most of us don’t have the ready cash necessary to build a business from the ground up, which is why lenders exist. Whether you want to start a new store, acquire an existing one, or invest in growth, a loan for a barber shop can help.
FAQs on loans for barber shops
How much does it cost to open a barber shop?
It costs between $50,000 to $150,000 to open a barber shop, depending on the location, equipment needed, and other factors.
What are some business loans for barber shops?
The right business loan for you depends on your goals. While term loans and SBA loans offer lump sums of cash that you can use for a variety of business needs, equipment loans or commercial real estate loans are tied to specific assets. If you need more flexible funds, a business line of credit or business credit card may be good options.
What eligibility requirements must you meet to get a barber shop loan?
It really depends on the lender. That said, the stronger your credit score, the more time you have in business, and the better your annual revenue, the more likely you are to get approved for a lower interest rate and better repayment terms. Providing thorough documentation and a clear business plan for how you’ll use the money can also help your chances of approval.
What documentation do you need to get approved for a loan for a barber shop?
For most business loans, you’ll usually need to show business information, financial statements, tax returns, and a business plan but requirements vary by lender.
What are good alternative funding options for barber shops?
If you have bad credit or can’t get approved for a conventional loan for other reasons, some good options to pursue are revenue-based financing or a merchant cash advance.
