Best Beauty Salon Financing

If you’re a hairdresser or nail stylist looking to open or expand your own business, beauty salon loans may help you get the funding you need.

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Best beauty salon lenders: More details

Huntington National Bank: Best for SBA loans

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Up to $5,000,000

10.50% to 14.00% 14% for loans $50,000 or less
13.5% for loans $50,001 to $250,000
12% for loans $250,001 to $350,000
10.5% for loans above $350,000
Some borrowers may qualify for lower rates. Based on the current prime rate of 7.50% + a rate maximum set by the SBA.

12.50% to 15.50% 15.5% for loans $25,000 or less
14.5% for loans $25,001 to $50,000
13.5% for loans $50,001 to $250,000
12.5% for loans above $250,000
Some borrowers may qualify for lower rates. Based on the current prime rate of 7.50% + a rate maximum set by the SBA.

Up to 300 months

Pros
  • SBA Preferred Lender
  • Offers multiple types of SBA loans, including SBA 7(a), SBA 504 and SBA Express loans
  • Fixed and variable interest rates are capped by the SBA
Cons
  • Doesn’t disclose eligibility criteria
  • Requires a down payment of 10% or more
  • Slower to fund than other types of financing, even with a Preferred Lender

Why we picked it

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Backed by the U.S. Small Business Administration (SBA), SBA loans have capped interest rates and lengthy repayment terms. Huntington National Bank is one of the country’s top SBA lenders by approval rate, making it a solid choice for government-backed funding. Huntington National Bank offers multiple types of SBA loans, including SBA 7(a), SBA 504 and SBA Express loans. The most popular option, the SBA 7(a) loan, provides up to $5,000,000 in working capital.

Huntington National Bank is an SBA Preferred Lender, meaning the bank offers a quicker application process for SBA loans. However, it’s important to keep in mind that even with a Preferred Lender, SBA loans are slower to fund than other loan types.

Learn more about Huntington National Bank.

How to qualify

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Huntington National Bank doesn’t disclose time in business, annual revenue or minimum credit score requirements, but you’ll generally need at least two years in business and a credit score of 650 or higher to qualify for an SBA loan. Contact the bank directly to learn more.

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Taycor Financial: Best for financing equipment

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$500 to $2,000,000

4.99%

12 to 84 months

Pros
  • Provides financing to cover the full cost of equipment with no down payment required
  • Limited documentation required for loans up to $400,000
  • No prepayment penalties
Cons
  • Charges a documentation fee
  • May require a personal guarantee
  • Stricter eligibility criteria for equipment refinancing

Why we picked it

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If you need to purchase essential equipment for your salon, an equipment loan from Taycor Financial might be a good choice. The lender offers 100% financing, meaning the funds they provide should be enough to cover the full cost of equipment with no down payment required.

Loan amounts reach as high as $2,000,000, and with no minimum time in business or annual revenue requirements, this is a startup-friendly loan option. However, additional fees apply, and you may need to make a personal guarantee to secure the loan.

Read our full Taycor Financial review.

How to qualify

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In order to qualify, you’ll need to meet Taycor Financial’s criteria of:

  • Minimum credit score: 600
  • Minimum time in business: Not required
  • Minimum annual revenue: No specific minimum
See Your Business Loan Offers

Fundbox: Best for purchasing inventory

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Up to $250,000

4.66%

3 or 6 months

Pros
  • Low time in business and annual revenue requirements
  • Relatively fast funding
  • No prepayment penalties
Cons
  • Short repayment terms
  • Requires weekly loan payments
  • May require a personal guarantee

Why we picked it

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A business line of credit may be better suited for inventory purchases because this form of financing gives you ongoing access to funds after repayment, allowing you to borrow what you need when you need it. Fundbox’s line of credit offers up to $250,000 to put toward inventory, payroll and other operating expenses.

There are no penalties if you choose to pay off the loan early. Plus, businesses only need to be operating for three months to qualify, so even startups may be eligible. However, a personal guarantee will be required, which can put your personal assets at risk if you fail to make your payments.

Read our full Fundbox review.

How to qualify

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In order to qualify, you’ll need to meet Fundbox’s criteria of:

  • Minimum credit score: 600
  • Minimum time in business: 3 months
  • Minimum annual revenue: $30,000
See Your Business Loan Offers

Fora Financial: Best for borrowers with bad credit

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Up to $1,500,000

13.00% Fora Financial's minimum rate is a 1.13 factor rate. This means you'd repay 13.00%, plus any additional fees, on top of the amount borrowed.

4 to 18 months

Pros
  • Low credit score and time in business requirements
  • Potential prepayment discounts
  • Opportunity to borrow more after repaying 60% of the original loan
Cons
  • High annual revenue requirement
  • Charges an origination fee
  • Factor rates make it difficult to compare loan costs with other lenders

Why we picked it

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If you’re a beauty salon owner with bad credit, Fora Financial’s loan offerings might be the right option. With its low minimum credit score of 570, Fora Financial makes its term loans accessible for small business owners with checkered credit histories, as well as new businesses that have only been operating for six months.

However, the trade-off to relatively lax borrower qualifications is higher borrowing costs with shorter repayment terms. Fora charges factor rates, which means you’ll have to multiply the loan amount by the rate to determine your total borrowing costs.

Read our full Fora Financial review.

How to qualify

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In order to qualify, you’ll need to meet Fora Financial’s criteria of:

  • Minimum credit score: 570
  • Minimum time in business: 6 months
  • Minimum annual revenue: $240,000
See Your Business Loan Offers

American Express Business Line of Credit: Best for borrowers with good credit

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$2,000 to $250,000

3.00% 3% to 9% for 6-month terms
6% to 18% for 12-month terms
9% to 27% for 18-month terms
12% to 18% for 24-month terms
Each draw counts as a separate installment loan. Single-repayment loans will have different rates and terms.

6 to 24 months

Pros
  • Low starting interest rates
  • Low annual revenue requirement
  • No prepayment, application or origination fees
Cons
  • Requires a personal guarantee
  • High late payment and insufficient fund fees
  • Only select customers can qualify for initial credit lines over $150,000

Why we picked it

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If you have good or excellent credit, you may find it easier to qualify with a lender offering low interest rates, which can help you save on your loan costs. American Express has the lowest starting rates on this list, but you’ll need to have a strong credit score to take advantage of them.

With an American Express Business Line of Credit, you can access up to $250,000 on an ongoing basis, with no application, origination or prepayment fees driving up the cost of borrowing. That being said, only borrowers with a pre-existing relationship with American Express will be able to qualify for initial credit lines over $150,000.

Read our full American Express review.

How to qualify

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In order to qualify, you’ll need to meet American Express’s criteria of:

  • Minimum credit score: 660
  • Minimum time in business: 12 months
  • Minimum annual revenue: $36,000
See Your Business Loan Offers

How beauty salon financing works

Beauty salon financing refers to any type of financing used to open or expand a salon.

Most lenders these days allow you to apply online, although some banks still require in-person applications.

Once a lender approves your loan application, the loan funds will be deposited in your business bank account. This may happen in a matter of hours, or it could take several weeks, depending on the lender.

Once you receive your funds, you’ll begin making payments on the loan, following the terms laid out in your business loan agreement.

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Types of financing for salons

To start a salon business, you’ll need enough cash flow to rent or buy a location, hire employees and obtain the necessary equipment. It can be rather costly, and you may need a loan or line of credit to make it happen. Depending on how you plan to use the funds, there are a few different types of small business loans to consider for your salon project.

Term loans

This is probably what comes to mind when you think of a small business loan. Term loans provide a lump sum of money that is repaid with interest through fixed payments.

Term loans are offered by both traditional banks and online lenders. While loans from traditional lenders tend to have lower interest rates and fewer fees, the criteria to qualify is much stricter than what you’ll find with alternative lenders.

Additionally, traditional lenders may take a few weeks to process your application and deposit your loan funds, which may not be ideal for salon owners with urgent financing needs. Though the cost of borrowing tends to be higher, online loans may provide funds as soon as the same day you apply.

Business lines of credit

If you would prefer to have ongoing access to funds, a business line of credit could be a better financing option. With a line of credit, you can borrow funds as needed up to a predetermined limit. Once you make a withdrawal from your credit line, you’ll begin making payments on the borrowed amount — but you’ll still be able to borrow more, assuming you haven’t reached your limit.

Business lines of credit can be beneficial because they reduce the risk of borrowing more than you can afford to repay. However, they may come with additional costs, such as maintenance or draw fees.

Equipment financing

To open a beauty salon, you’ll need to invest in essential furniture and equipment such as stylist chairs, shampoo stations and professional hair tools. Depending on the scope of your salon, equipment costs could add up quickly. If equipment expenses exceed your available funds, equipment financing might be able to make up the difference.

Equipment loans are designed to finance essential business equipment. Some lenders provide enough financing to cover the full cost of equipment with no down payment required, and with lengthy repayment terms, you can spread out equipment costs over several years.

That being said, the equipment typically acts as collateral to secure the loan, so if you fall behind on your payments, the lender could seize the asset to recoup its losses.

SBA loans

The U.S. Small Business Administration (SBA) partners with financial institutions to provide financing for business owners that might not be able to qualify elsewhere. Thanks to the backing of the SBA, lenders are able to make funding more accessible and affordable, with interest rates capped to keep loan costs manageable.

However, SBA loan applications require detailed documentation, and it could take two months or longer for approved businesses to receive their funds. Working with an SBA Preferred Lender can shorten this wait to two weeks, but that is still a longer turnaround time than what you can expect with other types of loans.

Commercial real estate loans

If you decide to purchase commercial space for your salon, you might need a commercial real estate loan. These loans are similar to residential mortgages, typically requiring a down payment of 20% or more and using the property as collateral to secure the loan. Commercial real estate loans tend to have lengthy loan terms, with borrowed funds repaid in monthly installments.

How to compare beauty salon lenders

To choose the right lender to finance your beauty salon costs, you’ll need to consider several factors, including how much you need to borrow and how quickly you need the funds. Here are a few things to keep in mind when comparing small business lenders:

Interest rates: Depending on the lender, business loan interest rates may be fixed or variable. Rates have a major impact on borrowing costs, so be sure to compare rates between multiple lenders to find the most affordable option that is available to you.

Additional fees: In addition to interest, some lenders charge extra fees for business financing. These might include application, origination and prepayment fees, all of which can drive up the cost of borrowing.

Repayment terms: Pay attention to loan terms and payment schedules. Some lenders only give you a short amount of time to repay your debt, and some require you to make daily or weekly loan payments.

Time to funding: Though some lenders advertise same-day funding, the fine print may tell a different story. If your financing needs are urgent, make sure you understand the amount of time it will take to process your application and deliver your funds.

Collateral requirements: Many lenders require some form of collateral to secure business loans, especially for newer businesses and business owners with less-than-perfect credit. Take the time to understand collateral requirements and the impact they can have on your personal and business assets.

 Don’t forget your business plan

When you apply for salon funding, you’ll need to provide certain documents, including a business plan. This detailed plan should explain your salon strategy, outline your products and services and include a request for financing. Be sure to explain how you plan to use the funds, whether that is to start a new business or expand an existing one.

Your business plan should also include details on your salon structure, which determines whether your stylists will be categorized as independent contractors or employees.

How we chose the best loans for beauty salons

We reviewed more than 20 lenders to determine the best beauty salon loans. To make our list, lenders had to meet the following criteria:

  • Eligibility criteria: To include financing options for new and established salons, we included lenders with a wide range of credit score, time in business and annual revenue requirements.
  • Rates and terms: We prioritized lenders with competitive rates, fewer fees and greater options for repayment terms.
  • Repayment experience: We considered each lender’s reputation and business practices, favoring lenders that report to all major credit bureaus and offer reliable customer service.

Frequently asked questions

The cost of opening a salon depends on several factors, including whether you buy an existing salon or choose to start one from scratch. On average, opening a salon costs between $60,000 and $500,000. If you want to minimize your upfront costs, leasing a space is typically cheaper than buying one, though purchasing property can allow you to build equity over time.

If a lender rejects your loan application, you could consider applying elsewhere, depending on the reason you were denied. Online lenders tend to have the most lenient eligibility criteria, though this flexibility typically comes with higher loan costs.
 
If you can afford to wait for salon financing, it might be a better choice to spend some time working on your credit and increasing your annual revenue to improve your odds of approval with more affordable lenders.