Are you the owner of an established nail or hair salon or are you hoping to open your own salon? Either way, it takes money to open and run a business.
You may have heard it said that it takes money to make money and this is true. What you do when you do not have the money? Look into loan options for hair and nail salons, of course.
Whether you want to get your business started or build on already in existence, you should consider applying for a small business loan. These loans are a great resource for paying business expenses.
You can also develop an improved marketing campaign to increase your customer base or handle an unanticipated emergency.
Regardless of your business financial needs, a small business loan can provide the funds required to solve your problem. Prior to making an application for a loan, you need to perform your due diligence.
Take a little time to determine which type of loan will serve your needs the best. Find out what is involved in the application process and be prepared toprovide the required documents.
Loan Options and Other Helpful Details
Virtually all loan applications will require some documentation. Very short term loans and lines of credit are less likely to require much in the way of documentation (if any).
However, Small Business Administration (SBA)Loans and traditional bank loans will require qualifying documents throughout the loan process.
You will increase your chances of success obtaining a business loan if your prepare ahead of time. Prepare your documents prior to making application.
Some of the documents that they may require are as follows.
- bank statements
- business licenses
- credit scores
- financial statements
- resumes of all business owners involved
- tax returns
- a written business plan
Three Frequently Asked Questions About Loan Options For Hair and Nail Salons
- Are there any grants for which hair and nail salon owners can apply?
Yes. There are grants for which you can apply. However, they are highly competitive and have many requirements you must meet to qualify. They are very specific in nature.
2. Are there any loans for hair and nail salons that do not require a down-payment?
Most lenders require that the business owner put some “skin into the game”. The most common percentage is about 25%.
It is thought that someone who has a significant amount of money invested in their business will be more cautious with the financial status of the company.
They are also less likely to default on the loan. The lender may insist upon collateral for the loan as well as a written business plan that details how you intend to replay the loan. They will also want to see a cash flow projection that is realistic.
3. How fast are salon loans funded?
Business lines of credit and short-term loans are usually funded quite rapidly. It is known to sometimes happen within 1 or 2 business days. However, SBA and bank loans make take several weeks,
Types Of Loans For Hair & Nail Salons
It is not rare for business owners to come across challenges while starting or building their salons. This is when taking out a small business loan is justified.
With due diligence and repsonsible selection of the lender and type of loan you can build your business without wiping out your personal checking account.
There are several types of lending options with which you can fund your hair or nail salon. This is true whether you are just now getting started or your business is already established but needs a little extra capital to grow as you would like.
Henre are some types of loans you may wish to consider:
Bank Loan:
This is a business loan that is taken out from a traditional bank. It usually requires a credit score in the excellent range and borrower requirements that are more stringent than most other lenders.
They also offer lower interest rates and longer terms of repayment than other types of loans. If you are purchasing an existing business, this is a strong contender.
SBA (Small Business Administration) Loan:
These loans offer long-term, low-interest loans to business owners and are easier than bank loans to obtain. One of the most favored options is the SBA 7 (a) loan.
It’s repayment terms may be set for as many as 25 years and the amount of the loan can reach up to $5 million. Some of the things the funds are used for include:
- commercial real estate
- equipment
- to purchase a business
- supplies
- working capital
Business Credit Card:
Using a business credit card gives you great flexibility with the funds it provides. You can use then any place that credit cards are accepted.
Your only limit is what has been set by the credit card company. Once you pay down the balance along with the set amount of interest, you can spend up to the limit again.
You may pay bills, purchase inventory or any other legitimate business need. If used wisely, the use of credit cards can improve your credit score.
Business Line of Credit:
This is one of the more flexible types of funding. The lender determines the limit of credit available to the borrower who determines when to make the draws as needed.
The funds can be used for any business purpose, including emergency expenses. They are often used for restocking inventory and paying bills.
Equipment Financing:
Any salon equipnment can be purchased with these loans. They include but are not limited to the following.
- hair dryers, curlers, flat-irons
- nail stations
- point-of-sale-system
- shampoo bowls
- stylist chairs
Although you take possession of the equipment at purchase,you can take years to repay the loan and lender interest fees.
Short-Term Loans:
These loans are dispersed in one lump sum are paid back over a specified period of time. This time may last only a few months or up to several years.
They are usually easier to obtain and the funds received faster than most other types of loans. However, you should anticipate higher interest rates .
In summary…
Four Tips On How To Get A Hair or Nail Salon Loan
If you are ready to apply for a hair or nail salon loan, be sure to remember these four tips to improving you chances of success.
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Verify your credit score and read the full report.
You need to have a full understanding of your credit standing before initiating the loan process. Each lender will have a minimum credit score for approving loans.
Do not waste your time applying for a loan that you cannot possibly be given due to a low score. Begin the process of applying for a loan by getting your free credit score and credit report.
Review the documents carefully and challenge any errors. If the score is not what it needs to be then either improve the score or choose a lender that would accept your credit score.
Make sure all payments that might affect your score are timely. Pay down (or totally off) any debts if possible.
Does Your Personal Credit Score Play A Role In Applying For A Business Loan?
2. Prepare Your Documentation
Most, but not all, types of loans will require some documentation to support your application. Short-term loans and lines of credit are less likely to demand much if anything in the way of documentation.
However, SBA loans and traditional bank loans are certain to require them. Furthermore, they are likely to require them throughout the entire process of application to qualify.
Prepare in advance. (see previous document list) Do not wait to begin this part of your application process.
3. Compare Your Options
You will be quite excited when the lender’s approval is received. Prior to signing on the dotted line, be sure to check out every possible funding option available to you.
Be sure you have found the best financial fit for your business. Take time to know which loans have the lowest rates, highest limits on borrowing funds and better terms in general. Be aware of any demands of collateral as well.
Always take time to look around. Compare lenders as well as loan options. Be sure you are applying for the funding that is best for you and your financial situation.
4. Be Sure You Understand What Your Loan Will Cost You
Before you decide to sign the loan contract, be sure you fully grasp the full costs of the loan. Avoid putting yourself into a cycle of debt by making poor financial decisions.
You need to calculate how much interest you will actually pay on the loan. Are there any origination or closing costs you need to consider? Would there be a prepayment penalty?
Thanks to Pixabay and Pexel for photos.