Salon owner cutting a customer's hair

The Best Business Loans for Beauty Salons

10+ min read • Apr 11, 2020 • Mary Kate Miller

Your beauty salon keeps its customer base looking and feeling their best. The right business loan options can keep your business’s finances looking and feeling just as good. Whatever your business needs—whether its nail tech supplies, a front desk, or new hires to help on the weekend—there’s a business loan for that. As much as we’d love to rank each business loan from best to worst for beauty salons, it varies depending on what you’re using it for.

Business Loans for Beauty Salons

Equipment loans, business term loans, lines of credit, SBA loans, commercial mortgages, short term loans, business acquisition loans, and business credit cards provide dynamic financing options for beauty salons. We’ve outlined some of the cases in which each of these loan options is your best bet. We’ve even calculated some hypotheticals to help you anticipate potential loan costs. These are general guidelines. You can use our calculator pages to tailor estimates to your business or receive real information on rates, terms, and eligibility after filling out our application. 

Equipment Financing

The bulk of beauty salon operational costs are tied to equipment. Equipment financing, specifically designed to provide capital for equipment purchases or repairs, is an accessible form of financing because it’s secured. The equipment that you’re purchasing or repairing works as collateral, providing security to the lender in case of default. In turn, lenders are more likely to fund equipment loans for borrowers who may have less time in business, lower revenue, or recovering credit. 

Equipment Financing Features

  • Loan amount: $5,000–5,000,000
  • Time to funds: Can be as fast as 24 hours
  • Loan Term: 1–5 years
  • Interest Rates: Starting at 7.5%

What Qualifies as Beauty Salon Equipment

The short answer: most objects you use to run your business. 

The long answer: hood dryers, shampoo, conditioner, coloring stations, salon chairs, clippers, mirrors, furniture, storage, ring lights, perm rods, towels, nail supplies, foils, hairdryers, curling rods, retail inventory, computers or tablets, POS software, equipment repair, and more. 

Financing Up-front Beauty Salon Equipment Costs

The total cost of your equipment loan will depend on some key variables: loan amount, loan term, interest rates, and the collateral value of your equipment. When opening a beauty salon, equipment costs can often tally around $27,000, but costs vary.

When you start a business, it can be harder to secure traditional business loans because you’re missing one thing: time in business. To qualify for the best rates and terms, many lenders require 3+ years in business. For newer businesses, you may still qualify but at higher rates. If you find you don’t yet qualify for an equipment loan, you may be able to utilize a 0% introductory APR credit card to make necessary equipment purchases. 

Financing Salon Equipment Purchases and Repairs with an Equipment Loan

Running a beauty salon can come with expensive equipment-related surprises. To help you anticipate the costs of equipment purchases and repairs, we’ve put together some estimates using our equipment loan calculator.

Total equipment loan costs vary for each borrower. Some key factors that affect your equipment loan cost include loan amount, interest rate, loan term, beauty salon time in business, and credit score.

These calculations were made for a business with 3+ years in business and a credit score of 620+. 

$10,000 Equipment Loan

  • 2 years: $438.75/month
  • 3 years: $288.33/month
  • 4 years: $214.79/month
  • 5 years: $171.17/month

$15,000 Equipment Loan

  • 2 years: $658.13/month
  • 3 years: $432.50/month
  • 4 years: $322.19/month
  • 5 years: $256.75/month

$25,000 Equipment Loan

  • 2 years: $1,096/month
  • 3 years: $720.83/month
  • 4 years: $536.98/month
  • 5 years: $427.96/month

$50,000 Equipment Loan

  • 2 years: $2,193.75/month
  • 3 years: $1,441.67/month
  • 4 years: $1,073.96/month
  • 5 years: $855.83/month

Introductory 0% Business Credit Card

Sometimes you need business financing before you meet the qualifications. In those instances, you can use a business credit card with 0% introductory APR to meet beauty salon capital needs.

When to Use a 0% Introductory Credit Card to Finance a Beauty Salon

Business credit cards with 0% introductory APR can be used to finance large purchases like hood chairs or bulk inventory purchases. Timing is key. You want to open the card close to when you make the purchase so that you have the full 0% introductory APR period to pay it back.

Before you open the card or make the purchase, calculate how much you’d have to pay each month to repay by the end of the introductory period. After that period is over, the card will switch to its regular interest fees—which are often high. Avoid skyrocketing costs with a little bit of planning followed by steady repayments. 

Assuming the credit card you open has a 12-month introductory period with 0% APR, here are the monthly payments you can expect for different purchase amounts:

  • $1,000: $83.33/month
  • $5,000: $416.66/month
  • $10,000: $833.33/month
  • $15,000: $1,250/month
  • $20,000: $1,666.67/month

Keep Repayment Costs Low

Pay on time. Pay on time. Pay on time. This essential tenant for all small business lending is even more important when it comes to credit cards. When you pay on time, you avoid late fees, reduce or avoid interest costs, and build a solid credit history that will help you qualify for other loan types in the future.  

Business Term Loan

The OG when it comes to business loans, a business term loan provides a set loan amount with steady repayment terms over a defined time. What you use it for is completely up to you. 

How a Business Term Loan Can Help Your Beauty Salon

A business term loan provides a stable way for your beauty salon to access increased working capital with flexibility in how the funds are used. You can use a business term loan for everything from opening a second beauty salon to hiring more employees or procuring necessary licenses and permits. 

Business Term Loan Features

  • Loan amount: $5,000–2,000,000
  • Time to funds: As little as 24 hours
  • Loan Term: 1–5 years
  • Interest Rates: Starting at 6%

Financing a Beauty Salon with a Business Term Loan

Business term loan decisions are made based on some key factors: your credit score, time in business, collateral, and your beauty salon’s Profit & Loss statement (or bank statements). To help you anticipate the potential costs of a business term loan, we’ve put together potential monthly payments using our business term loan calculator

These calculations were made for a business that is profitable, has 2+ years in business, and has a credit score of 700+. Loan costs were calculated with a 10% APR and a 5% origination fee. 

$5,000 Business Term Loan

$250 origination fee for all term lengths. 

  • 1 year: $439.59/month
  • 2 years: $230.72/month
  • 3 years: $161.34/month
  • 4 years: $126.81/month
  • 5 years: $106.24/month

$10,000 Business Term Loan

$500 origination fee for all term lengths. 

  • 1 year: $879.16/month
  • 2 years: $461.45/month
  • 3 years: $322.67/month
  • 4 years: $253.63/month
  • 5 years: $212.47/month

$25,000 Business Term Loan

$1,250 origination fee for all term lengths. 

  • 1 year: $2,197.90/month
  • 2 years: $1,153.62/month
  • 3 years: $806.68/month
  • 4 years: $634.06/month
  • 5 years: $531.18/month

$50,000 Business Term Loan

$2,500 origination fee for all term lengths.

  • 1 year: $4,395.79/month
  • 2 years: $2,307.25/month
  • 3 years: $1,613.36/month
  • 4 years: $1,268.13/month
  • 5 years: $1,062.35/month

$100,000 Business Term Loan

$5,000 origination fee for all term lengths. 

  • 1 year: $8,791.59/month
  • 2 years: $4,614.49/month
  • 3 years: $3,226.72/month
  • 4 years: $2,536.26/month
  • 5 years: $2,124.70/month

Business Line of Credit

A business line of credit is your most flexible financing option. If you could bleach a form of financing bright blond, box-dye it dark, and then take it light again (without an issue), this would be it. 

A business line of credit allows beauty salons to borrow against a predetermined sum. You can borrow as much as you like—up to the total amount—repay, and repeat. Because a business line of credit is revolving, you can borrow as many times as you like over the loan term, and the best part? You only pay interest on what you borrow. 

Business Line of Credit Features

  • Loan amount: $1,000–500,000
  • Time to funds: As little 1–2 weeks
  • Loan Term: 1- to 2-year maturity
  • Interest Rates: Starting at 8–24%

How to Use a Business Line of Credit for a Beauty Salon

Because a business line of credit is so flexible, you can use it to finance any number of needs for your beauty salon. Because time in business requirements tend to be lower with this form of financing, entrepreneurs are often able to qualify for a line of credit earlier in the life of their business. 

How a New Beauty Salon Can Use a Line of Credit

Newer beauty salons can use a business line of credit to finance necessary permits, hire employees, purchase necessary equipment, or stock your salon with essential inventory if you plan to offer retail sales of hair and beauty products. You can also use a business line of credit toward marketing efforts to let the neighborhood know that you’re open for business. 

How an Existing Beauty Salon Can Use a Line of Credit

A business line of credit can be an ideal financial safety net for a beauty salon. You can use it to finance unexpected employee sick leave, expansion efforts, remodeling of your existing salon, or purchases of retail stock inventory. Would your staff be able to charge higher rates and offer new services if you invested in training or a workshop? Finance the workshop with a business line of credit to keep your business operating smoothly. 

Financing a Beauty Salon with a Business Line of Credit

To qualify for a business line of credit, you typically need to have been in business for 6 months, as opposed to the 3 years required by other forms of business financing. You’ll also typically need $50,000 or more in annual revenue and a credit score of 560+. 

It’s hard to give estimates for what a line of credit might cost for the same reason it’s such a versatile salon financing solution: it entirely depends on what you borrow against the line of credit. To give you an idea of what your estimated monthly payments might be, you can use our business line of credit calculator

SBA Loans 

SBA loans have some of the biggest name recognition in business financing. Think of it like Olaplex… but backed by the government. Everybody’s into it, and there are a ton of ways an SBA loan can benefit your business. 

SBA loans are beloved because of their enviable rates and terms, which come from a portion of the loan being backed by the US Small Business Administration (SBA). Because the government guarantees a portion of the loan, it reduces the risk for lenders. In turn, lenders find it more appealing to lend to borrowers. 

Because SBA loan rates and terms are so attractive, the loans are highly competitive. Applying for an SBA loan typically requires more paperwork and takes a bit longer, so this financing option is best for when you have the time to wait. 

SBA Loan Features

Several different products fall under the umbrella of SBA loans, including 7(a) loans, 504 loans, and SBA Express loans. Each loan type has its own parameters. 

How a Beauty Salon Can Use an SBA Loan

How your business can use an SBA loan depends on the type of SBA loan you have. SBA 7(a) loans, one of the most flexible types, allows you to use the loan to buy land, refinance existing debts, or purchase salon chairs, coloring station equipment, or other materials. It also allows you to buy or expand an existing business. 

An SBA 504 loan will help you with financing matters related to the physical salon space itself. You can use a 504 loan to buy an existing building, purchase long-term machinery, build a new salon, or make renovations to an existing salon. 

An SBA Express loan is the fastest-to-funding of these options. SBA Express loan applications are reviewed within 36 hours, in the blink of an eye by SBA standards, but it still usually takes at least 30 days before you receive the funds. 

Financing a Beauty Salon with an SBA Loan

The specific costs of your SBA loan will vary from business to business. To give you a sense of what your monthly payment might look like with an SBA loan, we’ve run the numbers with our SBA loan payment calculator. You can also check the calculator for more details on loan amount and term length for each type of SBA loan. 

These calculations were made based on 3% for SBA fees, an 8% APR, and a minimum down payment of 15% for new businesses. These numbers should be taken as a general estimate for SBA loans, as they’re not based on any specific loan type within that category.

$50,000 SBA Loan 

New businesses will have a minimum downpayment of around $7,500. New and existing businesses can expect to have $1,250 in one-time fees. 

  • 10 years: $606.64/month
  • 15 years: $477.83/month
  • 25 years: $385.91/month

$100,000 SBA Loan

New businesses will have a minimum down payment of around $15,000. New and existing businesses can anticipate one-time fees to total around $2,500. 

  • 10 years: $1,213.28/month
  • 15 years: $955.65/month
  • 25 years: $771.82/month

$250,000 SBA Loan

The minimum down payment for new businesses will be around $37,500. New and existing businesses will pay one-time fees of about $6,250. 

  • 10 years: $3,033.19/month
  • 15 years: $2,389.13/month
  • 25 years: $1,929.54/month

$500,000 SBA Loan

The minimum down payment for new businesses will be an estimated $75,000. New and existing businesses should be prepared to pay one-time fees of about $12,500.

  • 10 years: $6,066.38/month
  • 15 years: $4,778.26/month
  • 25 years: $3,859.08/month

Short Term Loan

Sometimes you need cash in a jiffy. Short term loans were designed to give business owners access to cash as quickly as possible. A short term loan is ideal for helping your beauty salon through those tough times. 

How to Use a Short Term Loan for Your Beauty Salon

Short term loans are best used for situations where the funds can be repaid quickly. If something essential to your business breaks, that situation might call for a short term loan. Say your wash sink breaks and you need to get a plumber in to repair it tomorrow, or your whole computer system decides, “This is it! I’m done,” those are situations where a short term loan can come in handy. 

You don’t want to use a short term loan for something that takes time, like a renovation. There’s a price to pay for speed, and that’s higher interest rates. Short term loans lose their cost-effectiveness if you spread out the repayment period. 

Short Term Loan Features

  • Loan amount: $2,500–500,000
  • Time to funds: As little as 24 hours
  • Loan Term: 1–3 years
  • Interest Rates: Starting at 8%

Financing a Beauty Salon with a Short Term Loan

Short term loans have an even higher number of variables than other forms of business financing, but we wanted to give you a rough estimate of what your monthly payments could look like, so we plugged some hypotheticals into our short term loan calculator

These calculations are based on an 8% interest rate and without the borrower making any extra monthly payments.

$5,000 Short Term Loan

  • 13 months: $402.80/month
  • 20 months: $267.87/month

$10,000 Short Term Loan

  • 13 months: $805.61/month
  • 20 months: $535.74/month

$20,000 Short Term Loan

  • 13 months: $1,611.21/month
  • 20 months: $1,071.47/month

Commercial Mortgage

You need a dedicated space to run a beauty salon. True, you can rent one, but owning a commercial property comes with benefits. You can enjoy the stability of knowing the landlord won’t change the rent, the building becomes an asset that can be used as collateral for future business financing, and expensive renovations can make more sense when you know you’ll be in the space for a while. 

A commercial mortgage was designed to help you do all that and more. 

Commercial Mortgage Features

  • Loan amount: $250,000–5,000,000
  • Time to funds: As little as 45 days
  • Loan Term: 20–25 years
  • Interest Rates: Typical ranges begin at 4.25–6%

How to Use a Commercial Mortgage for a Beauty Salon

Like an equipment loan, the use of a commercial mortgage is designated for a specific use—the purchase or renovation of a commercial building. Use this loan type when you want to buy a salon space or when you want to invest in renovations or repairs to a space you already own. 

Financing a Beauty Salon with a Commercial Mortgage

We’ve used our commercial mortgage calculator to put together some rough estimates to help you anticipate the monthly payments of your commercial mortgage. These calculations are based on an APR of 5.5% and a minimum downpayment of 10%, but the total cost of the loan will vary from borrower to borrower. 

$250,000 Commercial Mortgage

Borrowers can anticipate $25,000 in estimated one-time fees. 

  • 15 years: $2,042.71/month
  • 20 years: $1,719.72/month
  • 25 years: $1,535.22/month

$500,000 Commercial Mortgage

Borrowers can anticipate $50,000 in estimated one-time fees. 

  • 15 years: $4,085.42/month
  • 20 years: $3,439.44/month
  • 25 years: $3,070.44/month

$1,000,000 Commercial Mortgage

Borrowers can anticipate $100,000 in estimated one-time fees.

  • 15 years: $8,170.83/month
  • 20 years: $6,878.87/month
  • 25 years: $6,140.87/month

$2,000,000 Commercial Mortgage

Borrowers can anticipate $200,000 in estimated one-time fees.

  • 15 years: $16,341.67/month
  • 20 years: $13,757.75/month
  • 25 years: $12,281.75/month

Business Acquisition Loan

Sometimes the best business option is to bypass the tedium of launching a beauty salon, purchasing an existing one instead. A business acquisition loan is designed to help you take advantage of that unbeatable business opportunity when you don’t have the cash on hand to purchase the business outright. 

How to Use a Business Acquisition Loan

There are 2 prime scenarios where a business acquisition loan is just the ticket toward building your beauty salon empire. The first situation is to use a business acquisition loan to purchase your first business. Perhaps you already work at the salon and the owner is looking to retire. Maybe there’s an existing salon in your neighborhood that has the perfect location and the buildout is already done. 

Business expansion is the second great scenario for using a business acquisition loan. If you’ve found it’s time for your salon to expand, you can reduce the need for a lot of legwork by purchasing an existing business for your 2nd, 3d, or 40th location. 

The Benefits of Using a Business Acquisition Loan

A business acquisition loan can reduce construction time and cost. It saves you the time and capital of hiring a staff, and it can even reduce the need for marketing efforts if the existing salon has a loyal, established customer base. 

Business Credit Cards

A business credit card should be in the financing arsenal of every small business owner. Not every purchase requires going through the process of applying for a business loan. In those cases, you can still let those purchases work for you with a business credit card.

Business credit cards help you use everyday purchases to build business credit, which will make you more appealing to lenders the next time you need to apply for funding. With a wide variety of rewards offerings, you can use business credit cards to earn cashback or earn points toward travel rewards.

Let’s Get Specific About Your Loan Options

To get specific information about which products you qualify for and what your rates and terms will be, you can fill out our 15-minute application. There’s no fee, no obligation, no effect on your credit, and our business finance experts can help you weigh your loan options from our network of 75+ lenders and decide on the best loan option for your beauty salon. 

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Mary Kate Miller

Mary Kate Miller is a writer based in Chicago, IL. She specializes in covering finance (personal and business), investing, and real estate. Her mission in life is to give readers the confidence and the knowledge needed to grow their wealth by making financial topics more accessible. When she's not writing about topics like business loans, you can find her playing armchair financial advisor to the Real Housewives.