How to Get a Loan to Start or Grow Your Beauty Salon Business in 2023

December 14, 2022

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The beauty salon industry took a significant step back due to the COVID-19 pandemic, but with the industry in recovery, now could be a great time to find a loan to start or grow a beauty salon of your own.

According to Statista, the hair, skin, and nail salon industry has been growing year-over-year since the precipitous fall in 2020. People are returning to their pre-pandemic lifestyles, which often involve regular visits to a beauty salon business.

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Why Salons Need Business Financing

Because they require a significant amount of capital in order to operate, salon business loans are common in the industry. There are a number of ongoing expenses that must be dealt with, and many of those expenses can create the need for small business financing.


Depending on whether your salon is focused on hair, nails, skin, whole-body wellness, or a combination of the above, a number of pieces of equipment are needed, and none of it is cheap. You’re looking at:

  • Chairs. Those hydraulic chairs used in hair salons can cost thousands if you’re buying one to last a lifetime.

  • Basins. And don’t forget the plumbing needed to make them work.

  • Tools. Scissors, irons, trimmers, steamers, dryers, and more.

  • Lighting. The right lighting setup allows clients to see the work you’ve done.

  • Reception-area equipment. Your reception area might require a computer or tablet along with the desk and seating for your front-desk staff and guests.

  • Tanning equipment.

Working Capital

Businesses need cash left over each month in order to function. If all (or nearly all) of your company’s income each month is being spent on bills like utilities, rent, or payroll, your business won’t be able to steer away from emergencies. Many small business owners opt to take out loans simply to shore up their bank accounts and make sure that any unexpected issues can be dealt with quickly.


You need a team. That means hiring additional stylists to fill out the other chairs in your salon. The front desk will need someone working to schedule appointments. And if you’re considering offering additional services like massage, nail care, or hair removal, each service might require a specialist or two.

Types of Loans for Beauty Salons

You know what your business needs, so which small business loans are the best fit? Depending on your exact business, your credit history, whether you’re an existing salon or a startup, and what you intended to use the money on, many different financing options can be applicable.

Term Loans

Term loans are the classic form of lending you picture when you imagine a loan. A lender, often a traditional bank or online lender, lets a company borrow an agreed-upon amount of money at a particular interest rate. The borrower makes payments each month until the loan amount and interest have been repaid.

These loans are flexible: you can use them for many different business purposes, and they come in a variety of sizes, interest rates, and repayment terms.

SBA Loans

SBA Loans are term loans guaranteed by the United States Small Business Administration. That means the government uses taxpayer dollars to promise a third-party lender that if the borrower defaults, Uncle Sam will repay up to 85% of the debt.

Because they’re at a low risk of losing a ton of money, lenders are able to offer SBA loans at exceedingly low interest rates. However, the fact that the money guaranteeing those loans is taken from the pockets of American citizens, and the SBA doesn’t want it thrown around carelessly. In fact, loan applications for SBA loans are very complicated, with strict credit score and time-in-business requirements. The money can take weeks or longer to hit your bank account.

SBA 7(a) Loan

The most common form of SBA Loan is the SBA 7(a) loan. They can be up to $5 million and used for working capital, purchasing equipment, buying real estate, or even to refinance existing debt.

SBA 504 Loan

Another option available through the Small Business Administration is an SBA 504 loan. These are very long-term loans specifically designed for commercial real estate purchases and can be used to finance up to 90% of the cost of leasing salon space. In most cases, they are capped at $5 million.

Equipment Financing

If you’re looking for financing specifically for equipment purchases, equipment financing could be a good option. With this type of loan, the equipment itself serves as collateral—which means that if you default on the loan, the lender could repossess the equipment.

Let’s say you need some new equipment for your salon. With an equipment loan, you’ll make a sizeable down payment (20% or so), and then the equipment loan will cover the remainder of the cost.

If for some reason you’re not able to pay back the loan, the lender will repossess the salon equipment you bought and then resell it, recouping a majority of their loss.

Equipment loans can also be used to repair, upgrade, or even lease equipment in many cases.

Revolving Lines of Credit

Business Line of Credit

A small business line of credit is a type of loan that gives businesses access to funds as needed up to an approved limit—much like a credit card—and can be used for short-term expenses like inventory or to cover seasonal fluctuations in cash flow. One advantage of this type of loan is that businesses only pay interest on the funds they actually use—rather than on the entire approved credit limit.

Lines of credit are basically able to function as working capital loans you don’t pay for until you need. You only use the cash you need, when you need it. No need to make monthly payments until you’ve withdrawn some of the funding.

Business Credit Cards

Business credit cards, like personal credit cards, can be very helpful, or very dangerous. They function just like personal credit cards: you’re assigned a credit limit, make purchases using the card, and can pay down your credit card in order to borrow again.

Just like a personal credit card, many business credit cards make significant offers to salon owners, which can make them excellent options. Sometimes, cards will offer rewards or points to their customers, meaning that your regular purchases can result in cash back, travel points, or even discounts on helpful services.

Merchant Cash Advances

Finally, there are merchant cash advances, or MCAs. A merchant cash advance is quite different from other types of small business financing, particularly because they’re not loans. Instead, they’re known as sales-based financing.

That’s because MCA providers aren’t particularly interested in your credit: most MCA application processes won’t involve a deep look into your business credit score or your personal credit score. Instead, they’ll want to see your annual revenue.

Merchant cash advances are paid back by the provider taking a certain percentage of each day’s debit and credit card transactions until an agreed-upon total has been reached. So instead of making a monthly payment, you’re making payments every time a client pays via card.

That fixed repayment amount is another unique feature. MCAs typically come with what are known as factor rate. The factor rate is multiplied by the size of the advance in order to find the total repayment amount.

MCAs move very quickly and can be used for nearly any business purpose, which makes them very helpful for companies with poor credit or companies who have an immediate need. However, the effective APR on an MCA can reach triple digits.

Final Thoughts

As you can see, several different types of loans are types of loans available to small businesses—each with its own advantages and disadvantages. No matter which type of loan you choose, taking out a loan is an important decision that should not be made lightly. But if done correctly, borrowing money could give your salon business the boost it needs to succeed.

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