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Business loans for salons and spas

Get the financing your salon or spa needs to stay on top of the trends.

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By

Anna Serio

&

Emma Balmforth

Updated

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With the new potential for beauty trends to go viral, business at salons and spas is likely at an all-time high. Whether you’re new on the scene or you’ve had a salon or spa for a while, 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 type of financing to help your salon or spa grow into a successful business.

What loan options are available for salons and spas?

There are plenty of financing options out there to help your salon or spa grow and improve. Here are a few financing options:

  • Line of credit. Want to fund a long-term project? A line of credit might be what you need. Lines of credit are similar to credit cards, but typically come with a higher limit, lower APRs and a slightly different method of repayment. A line of credit can also be helpful for salon owners during the winter, which tends to be a slow season — especially for nail salons.
  • Merchant cash advance. This option gives you an advance on future sales. Your business can typically borrow a certain percentage of its annual revenue and pay it back plus a predetermined fee with a percentage of your sales each day. This process is relatively easy if your customers pay by credit card, as the lender can deduct daily or weekly repayments based on credit card sales.
  • General use business loan. Term loans come in fixed amounts and are best for covering one-time expenses. You can either get an unsecured or secured loan. Secured loans can be cheaper but are backed by your personal or your business’s assets, while unsecured loans don’t require collateral but tend to have higher interest rates.
  • Equipment financing. If you’re constantly buying equipment like manicure tables, foot-spa jets and fans, it might be hard to keep up with costs. An equipment loan can help you cover these expenses.
  • Commercial real estate financing. Want to add tanning beds or massage tables to your spa but don’t have the space? When it’s time to move to a new location or expand into the space next door, a commercial real estate loan is what your business likely needs to foot the costs.
  • Short-term business loan. These small-dollar loans take less time to apply for and can be in your hands within a few short days. They can help you out of an unexpected disaster — like replacing a broken foot spa. But with high APRs, they’re also one of your more expensive options and are best left for emergencies.

How to decide which financing offer is best for your business

Start by asking yourself how a business loan can help your business. If your salon is struggling because of short cash flow, start looking into merchant cash advances or lines of credit. If you need to upgrade your equipment or move to a better location, 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 financing type? It’s time to check out lenders. Look for ones that offer 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.

Compare costs

When it comes to comparing costs, consider APRs, monthly repayments and total loan cost. The APR is an expression of your loan’s interest and fees as a percentage. It’s a better way to compare the total cost of different loans with the same term length — which is the amount of time you’ll have 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 you’ll end up paying more in the long run because of interest. To keep your overall costs to a minimum, you’ll 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 team is. While online reviews aren’t always the most accurate picture of a customers experience, lots of similar complaints can highlight a lenders weak spots.

Compare top business loans for beauty salons and spas

1 - 3 of 3
Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
OnDeck Business Loan
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
$100,000/year
6+ months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum annual gross revenue of $100,000.

OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.
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More Info
Merchant Growth Business Loan
Merchant Growth Business Loan
12.99% - 39.99%
$5,000 - $500,000
3 - 12 months
$10,000 /month
6 months
Unsecured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months and have a minimum of $10,000 in monthly sales.

Merchant Growth offers financing tailored to business needs. It specializes in providing capital based on future cash flows, but it also offers fixed solutions. Fill out an application within 5 minutes and get your funds within 24 hours.
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More Info
Loans Canada Business Loan
Loans Canada Business Loan
6.60% - 29.00%
$4,000 - $500,000
3 - 60 months
over $10,000/month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a Canadian business bank account and show a minimum of $10,000 in monthly deposits ($120,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $500,000. Complete one simple online application and get matched with your loan options.
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More Info
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Representative example: Chelsea buys new equipment for her salon

Chelsea owns a beauty salon and has been in business for over 10 years. She wants to replace all of her dated pedicure chairs – with the newer, luxury model costing $5,000.00 a chair. She will need to buy 10 chairs to replace the old ones, which means she needs to come up with $50,000.00. Chelsea currently only has $5,000.00 available to spend on the new chairs, however a lender has told her she only needs a 10% deposit to take out a secured equipment loan.

Before accepting the lenders offer, Chelsea heads online to compare a range of lenders. She is able to get approved for an equipment loan with competitive terms since she has been in business for a long time and has strong personal credit.

Cost of 10 pedicure chairs$50,000.00
Loan typeEquipment loan
Loan amount$45,000
Interest rate (APR)9.00%
Loan term4 years
Additional feesOrigination fee of 1.00% ($450.00)
Monthly payment$1,119.83
Total loan cost$54,201.69

*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.

What common business expenses can I cover with financing?

  • Remodelling. Investing in interior design can seriously boost your revenue if done right. A business term loan can help you cover these costs.
  • Upgrading equipment. Salon equipment might be built to last, but staying on top of the trends also applies to your equipment design too — especially in a hair or nail salon. An equipment loan can help make sure your business has the newest cutting edge technology so you can keep your customers happy and up to date.
  • Inventory. Even if you don’t sell your own beauty or hair products, you can’t give someone a makeover without the right supplies. A line of credit can help you pick up these recurring expenses when your business can’t.
  • Covering cash flow gaps. Salons are seasonal, there’s no way around it. If you’re struggling to cover your costs during the post-holiday slump, a merchant cash advance or a line of credit could do wonders to keep your salon afloat.
  • Moving or expanding. Commercial real estate loans have got you covered if you want to open a new space.
  • Marketing. Getting the word out by hiring a marketing firm (or having your own in-house expert) can pay for itself multiple times over. General business term loans, merchant cash advances and lines of credit can all help you out in this area.
  • Going natural. Working in a salon can have a hugely negative effect on employee health if they’re constantly exposed to nail polish and other products with harsh chemicals. Investing in products with natural ingredients can lower your health care costs – and attract health conscious clients.
  • Moving into the digital age. Making it easier for customers to book an appointment, pay and even tip can also bring in the younger crowd. Equipment loans and term loans can help your salon take this leap.

What will I need to apply?

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:

  • Bank statements. Most lenders ask to see your business’s most recent bank statements to get a sense of its current revenue flow. Some might also ask to see your personal bank statements, especially if you’re backing the loan with your assets.
  • Tax returns. Lenders like to look at tax returns to get an overall idea of your salon’s yearly earnings. Like with bank statements, some lenders might also ask to see your business’s tax returns.
  • Credit card sales records. If your bank statements and tax returns don’t give a good idea of your salon’s actual earnings today, you might also need to provide credit card sales records to show it has a positive cash flow.
  • Your personal credit score. While some lenders may look at your business credit score, it’s far more common for lenders to consider the personal credit score of the owner. This can play a huge role in whether or not you’re approved and is even more important if your business is young.
  • A business plan. Banks and credit unions love to see a business plan, but some online lenders will ask for one as well. It’s a good idea to have one in any case — it can help keep your business goals on track. Pay particular attention to the financial projections, since your lender will partly rely on those when determining whether or not your salon can afford the loan.

Compare salon loans now

What challenges might I face getting a loan as a salon or spa owner?

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 for 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 may have trouble qualifying for financing, especially if their business is 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 loan with a competitive interest rate. In this case, you might want to look into other options like crowdfunding, the Canada Small Business Financing Program (CSBFP), grants, or equity investments from venture capitalists or angel investors instead. These financing options aren’t just for those with bad credit – startups can also benefit.

7 ways to help your salon succeed in 2023

We gathered seven tips from Simply Organic (the largest distributor of professional organic salon products in the world) on growing a beauty business.

  1. Have your own products. Be it nail polish, lotion or haircare products, customers buy more from their salon than you might think. A simple (okay, maybe not so simple) way to increase your profits is to make your own products.
  2. Go natural, go organic. We mentioned earlier that natural products are good for your employees. But customers are also increasingly worried about beauty products doing more damage to their bodies than good. If your salon doesn’t stock these already, you might want to at least have it as an option for your health conscious customers.
  3. Market to your niche. Instead of trying to appeal to everyone, know who your customer is and go after them. You might have more success developing a loyal following that way.
  4. Use Instagram. Instagram is one of the easiest ways to get the word out about your salon without forking over too much – if any – cash. It gives you the opportunity to show off new looks and can expose you to a client base you might not have otherwise reached. You can pay for ads occasionally or hire someone to manage the account for you a couple of hours a week.
  5. Invest in education. Setting yourself apart as an expert can require some extra training for your staff. Stay on top of the latest trends by signing your employees up for online tutorials, classes and training sessions.
  6. Don’t ignore men. Men have become increasingly interested in self-care and experts predict that in the future, salons and spas will see a spike in male-centric grooming products. Stay on top of this by paying attention to trends for all genders rather than just focusing on women alone.
  7. Upgrade your technology. Making it easier for customers to book an appointment online or pay through apps like Apple Pay or PayPal can make all the difference if you’re trying to attract a younger clientele. Bonus points if there’s an option for customers to leave cashless tips.

Bottom line

Keeping up with the latest trends is your business as a hair, spa or nail salon owner. When that calls for funds you don’t have upfront, a business loan can help you get what your salon or spa needs to help it 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 needs. To learn more about specific types of financing, check out our comprehensive guide to business loans.

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