Editor's choice: OnDeck business lines of credit
- Business or practice ownership not required
- No hard annual revenue or time-in-business criteria
- Multiple loans OK
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Beauty and nail salons might have taken a hit in the last recession, but business has never been better thanks to a booming economy and the new potential for beauty trends to go viral. Now that practically every other teenage girl wants unicorn hair, it might be a great time to invest in your business’s potential by taking out a loan to expand. Read on to learn how to find the right loan to help your salon or spa be its best.
You might have heard that some lenders offer loans specifically for salons, but your options aren’t limited to those few. These are some of the business loan types your salon might want to consider.
Start by asking yourself how a business loan can help your business. If your salon is struggling because of spotty cash flow, start looking into merchant cash advances or lines of credit. If you need to upgrade your equipment or move to a trendier ZIP code, equipment or real estate loans are your best bet. In short: Pinpoint your needs and find the type of financing that makes the most sense for you.
Found the right loan type? It’s time to check out lenders. Look for ones that offers the amount you need with a repayment schedule that works for your business’s cash flow. Merchant cash advances draw from your daily sales, while most other loans come with monthly or weekly repayments.
When it comes to comparing costs, consider APR, monthly repayments and total loan cost. The APR is an expression of your loan’s interest and fees as a percentage. It’s a quick way to compare loans with the same term length — or the same amount of time to pay it off.
Monthly repayments are how much your business needs to pay each month. You can lower your monthly repayments by choosing a longer loan term, but it’ll end up paying more in the long run. To keep your overall costs to a minimum, you might want to go for the shortest loan term that your business can comfortably afford.
You’ll also want to compare other factors like the company’s reputation with customers and how accessible its customer service line is. While online reviews aren’t always the most accurate picture of a customer’s experience, lots of similar complaints can highlight a lender’s weak spots.
While it depends on what type of loan you’re applying for and how long your salon has been around, you’ll typically need to provide the following information.
Since hair, nail and beauty salons can rely on a combination of credit card and cash sales, you might have a little more trouble presenting your business’s finances than other types of companies. One solution to this is to use accounting software to easily keep track of your revenue. Some online lenders might even ask to access your business’s accounting software instead of looking at bank statements.
Newer salon owners can have trouble qualifying for financing, especially if they’re less than a year old. If your salon really needs that loan, focusing your energy on your business plan might be your best bet. Not only can your financial projections help your lender get an idea of where you might be in a year, but it’s also where you get to make a case for your salon. If you have a new salon but established personal credit, you could consider a personal loan for business use.
Have poor personal credit? Unfortunately, you might have trouble qualifying for a competitive rate. You might want to look into other options like crowdfunding, grants or equity investments from venture capitalists or angel investors instead. Startups can also benefit from these options.
We gathered seven tips from Simply Organic, the largest distributor of professional organic salon products in the world, on growing a beauty business.
Keeping up with the trends is your business as a beauty or nail salon owner. When that calls for funds you don’t have upfront, a business loan can help you get what your salon needs to grow.
From lines of credit and merchant cash advances to equipment and commercial real estate financing, there are several types of business loans out there to meet your salon’s specific situation. To learn more about what option is right for you, you might want to check out our comprehensive guide to business loans.
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