SBA 7(a) Loans for Beauty Salons
Right now, there are about 82,000 beauty salons in the U.S., generating approximately $20 billion in revenue each year. From 2006-2015, beauty salons across the country took out more than 9,000 SBA 7(a) loans, with a total loan amount of more than $1 billion, and an average loan size of around $110,000. 7(a) loans are attractive to salon owners for a variety of reasons, including the fact that they can be used for both working capital, equipment, and commercial real estate, and that they can be easier to acquire than traditional bank loans.
SBA 7(a) Loans for Salons: What You Need to Know
SBA 7(a) loans can be used to start, purchase, or expand a salon business. Common uses include:
Buying new equipment: Purchasing new equipment for a beauty salon can be expensive— especially if you want quality equipment that will satisfy the needs of your clients.
Purchasing beauty supplies: SBA 7(a) loans can be used for working capital, and for salons, that often means supplies, including shampoos, conditioners, and everything else a salon might need. Plus, 7(a) loans can also be used to pay employee salaries and to help beef up a salon’s advertising and marketing budget.
Buying a salon: If you’d like to acquire an existing salon, or even buy out a partner in your current salon business, an SBA 7(a) loan could be an effective way to do so.
Refinancing business debt: SBA 7(a) financing can be used to refinance business debt under certain circumstances— but only when the debt is being offered to the borrower on ‘unreasonable terms’ and the debt was used to finance purchases that could also be financed with a 7(a) loan (i.e. no personal expenses allowed.)
Other Kinds of SBA Loans for Salons
While the SBA 7(a) loan is a great option for many salon owners, it may not be the right form of financing for everyone. In particular, salon owners looking for faster SBA financing may want to look towards the SBA express loan, which can be approved much more quickly, and has a maximum loan amount of $350,000. In other cases, borrowers looking for a smaller amount of financing may want to look into SBA microloans, which have a maximum loan amount of $50,000, and don’t typically have the strict credit requirements that may restrict borrowers from getting other kinds of SBA loans.