Best Loans for Beauty Salons

Financing the Equipment Needed to Open

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Finding the best loan for your beauty salon depends on how you want to spend the funds and whether you are buying an existing salon or starting your own from scratch. Different loan products can serve you differently, depending on your need. Typical expenses include buying salon chairs and shampoo stations, hair care products and colors to use in your salon or sell to your customers, marketing expenses, and emergency fund cushions.

Options like startup loans, business credit cards, equipment financing programs, credit lines, and  SBA 7(a) term loans can help you manage your business.

We reviewed 12 lenders to arrive at the six best loans for beauty salons. We examined how fast they fund, their application process, rates, and financing options. Here's what we found.

The Best Loans for Beauty Salons of 2022

Best Overall : Upwise Capital


Upwise Capital

 Upwise Capital

Upwise Capital offers a wide range of funding products under one roof, enabling salon owners to seek new types of loans as they grow, making them our best overall choice for beauty salons.

Pros
  • Range of products to serve salon owners with high and low credit scores

  • Low down payment options

  • Products for many different growth needs

Cons
  • The Small Business Administration (SBA) loan is a lot of paperwork and a lengthy process

  • Online lender, no physical location to visit

Even with online lenders, relationships matter, so when you find a lender that offers as many loan products that can help you at different stages of your salon’s growth as Upwise Capital does, you’ll want to keep them close, so they are your first call when you need funds.

With Upwise Capital, you may qualify for one of the following depending on your credit, time in business, and collateral:

  • Business line of credit
  • SBA loan
  • Equipment financing
  • Short-term loan
  • Business term loans
  • Relief loans due to pandemic shutdowns
  • Working capital
  • Invoice and A/R financing
  • Real estate loans

Upwise Capital has the best website of any lender we’ve seen. Each loan product has its own webpage that explains how the funds can be used, typical rates and terms, and its requirements. You’ll even find a list of which documents they will need to get you approved and funded. You’ll start the process with a short online intake form, and their loan specialists will contact you within 24-48 hours.

With Upwise Capital, there are many flexible options with loan amounts ranging from $5,000 to $200 million. Depending on the loan type, you might get funded as soon as one day. However, most products average around two weeks, with SBA loans taking even longer than a month in some cases.

Short-term working capital loans may have a term length as short as three months, whereas an SBA loan can last 30 years. Their other loan types are in the one to 10-year range. The interest rates start as low as 4%, depending on your time in business, credit history, and loan type.

Best for Buying a Salon : YourSBA.com


YourSBA.com

YourSBA.com

With SBA business acquisition loans from $150,000 to $5 million, and online pre-qualification with no credit check, YourSBA.com is best for buying a salon.

Pros
  • No broker or origination fees

  • SBA acquisition loans from $150k to $5 million

  • Business owners can be pre-qualified without a hard credit check, so your credit score isn't affected by applying.

Cons
  • Business owners must have a minimum of $70,000 cash for a down payment

  • Online lender, no physical location to visit

Buying an existing salon can come with a high price tag, which will typically impact the origination and broker fees you’ll be charged. YourSBA.com fixes this problem by not charging origination or broker fees, making them our best option for buying a salon.

Pre-qualifying online puts your loan request with lenders ready to serve you and increases your approval chances, making it a good choice for someone applying for a business loan for the first time.

Like other SBA loans, YourSBA.com offers longer terms and lower rates than non-SBA loan products, and they are approved for business acquisitions. Loans can also be used for business expansion, new construction, the purchase of land or buildings, as well as buying inventory, equipment, machinery, furniture, fixtures, supplies, and materials. This makes YourSBA.com the right choice for those looking to buy and build out an existing salon.

It can also be used for working capital, a partner buyout, debt financing, and franchise financing. The term length for equipment, refinance, or business acquisition is 10 years, and for buying real estate, you can qualify for up to 25 years. 

There is no down payment required for a business expansion or a working capital loan; however, you’ll need to put down $70,000 in liquid cash to purchase a business. YourSBA.com can offer large loans for those needing it for acquisition with amounts ranging from $150,000 to $5 million. 

YourSBA.com can pre-qualify you quickly, and the underwriting process for the SBA 7(a) loan takes between 45 and 90 days. There are no set credit score minimums for the SBA program because your credit character, in other words, your full credit profile, is more important.

Other business requirements include:

  • Must be a legal U.S. business
  • Must have positive cash flow for the last two years
  • If no cash flow or no positive cash flow, the loan will be considered a “projection” loan or “startup” loan and require a 30% down payment

The maximum allowable interest rate is The Wall Street Journal prime rate plus 2.75%.

Best for Big Salons : Chase


Chase

 Chase

If you own a large salon, you’ll likely need large credit lines to manage and grow your business. Chase’s $500,000 credit line gives owners the best flexibility for their big salon’s needs.

Pros
  • Credit lines up to $500,000

  • Annual fee is waived when your average line use is above 40%

  • Renewable five-year revolving term

  • You pay interest only on the amount of credit you actually use.

Cons
  • At the end of the five-year revolving term, no further advances are available

  • Slower process and more documentation required than online lenders

A larger salon may require more money to expand or to buy equipment. In that case, a larger bank like Chase earned our top spot for best lender for big salons. Chase has business and commercial lines of credit for your business to have working capital when it’s needed. It is a well-recognized brand, so those who aren’t familiar with business loans can feel safe knowing they are working with a reputable bank to fulfill their business dreams.

Chase offers a commercial line of credit for up to $500,000 with initial terms of 12 to 24 months, which can be renewed, and allows for interest-only payments. Business owners can also request an advance or make payments online.  

Chase also offers other banking products that could help a beauty salon grow, including checking accounts, merchant services, business credit cards, and numerous other financial business services. With Chase’s size and capability, a business owner can easily have all their needs met in one place.

To start your application, you’ll schedule a meeting online. Plan on the application process taking 30 days. To qualify, Chase does not have a stated credit score minimum; rather, they look at the full credit report to review your history. Chase states that rates can vary by region and can be influenced by your banking relationship, credit history, and collateral.

Best for Small Salons : National Funding


National Funding

National Funding

National Funding, our top choice for small salons, specializes in smaller loans from $5,000 to $500,000 and equipment financing and leasing loans up to $150,000, with a simple application, speedy approval, and personalized customer care.

Pros
  • Loans range from $5,000 to $500,000

  • Equipment financing and leasing up to $150,000

  • Can be used for payroll

  • Funding in as few as 24 hours

Cons
  • Fewer financing products than other lenders

  • No acquisition financing

National Funding’s loans have no collateral requirements, simple automatic payments, and fast funding, making them ideal for small salons. They provide small business loans and equipment financing and leasing, so owners can purchase inventory, hire employees, fund payroll, pay utility bills, and upgrade their beauty equipment.

National Funding has a relatively easy approval process compared to other small business loan options. Applications can be made online, and a loan specialist connects the business owner to the right loan to suit their needs. If you submit the documents they request, funds can be in your bank account as soon as the next business day.

There are no credit score requirements, although credit history and the full report will be reviewed and considered to set an interest rate and term length.

Best for Salon Equipment Loans : OnDeck


OnDeck

 OnDeck

OnDeck comes out on top for the best option for equipment loans for salon owners because they have both a credit line and a term loan option, and both fund within three days and allow credit scores as low as 600.

Pros
  • Funds in your account between two and three days

  • Credit score minimum of 600

  • Online application

Cons
  • One year in business required

  • Annual revenues of $100,000 required

OnDeck’s loan options help salons stay agile by providing a variety of ways to finance their equipment purchases with a low credit score requirement, making them our best for salon equipment loans.

Loan options include an unsecured business line of credit and short-term loans. The online application will ask you how much funding you need, how soon you need it, and how you plan to use it. Then it will ask you about the size and age of your business and your personal credit history. You’ll even upload documents at this stage, moving you closer to the approval decision.

With OnDeck, you’ll receive funding within three days. Their business credit line funds up to $100,000, and their short-term secured loans have a $250,000 funding limit. Credit score minimums for both products is just 600.

You must have been in business for at least one year and have more than $100,000 in annual revenues to qualify.

The Bottom Line

Finding the best loan for your beauty salon depends on how you plan to use the money, how long your business has been open, your revenues, collateral, and credit history. Therefore, since your relationship with your lender can also influence your rates and terms, we suggest choosing a lender that can help you with various loan products as your salon grows.

If you qualify, the best rates and terms will typically come from the SBA 7(a) program. You can find those through banks, credit unions, and online lenders. Next, non-SBA loans from banks and credit unions will be your second-best option for rates and terms, usually. But online lenders score big with us because of their advantages over the more conservative banks and credit unions.

Online lenders can often finance people who banks turned down. Their process is almost always easier, requires far less paperwork, and funds within days instead of weeks or months. Those features are more important than shopping for the lowest rate for many small business owners.

Upwise Capital earned our overall best score because it has all of these options and features and can serve most salon owners no matter their stage of growth.

Compare the Providers

Lender Why We Picked It Best Features
Upwise Capital Best Overall Many loan products; funding as high as $200 million
YourSBA.com Best for Buying a Salon Simplifies the SBA loan application process; loans up to $5 million; no origination fees
Chase Best for Big Salons “Big bank” complementary products like checking and more; renewable business credit line up to $500,000
National Funding Best for Small Salons Funds as fast as 24 hours; loans up to $500,000, leases up to $150,000
OnDeck Best for Salon Equipment Loans Can fund a 600 credit score and above; funds in three days; unsecured credit line, secured short-term loan, and SBA loan options

Frequently Asked Questions

How Do You Finance a Salon?

If you are buying an existing salon priced between $350,000 and $5 million, you’ll want to look at the SBA 7(a) program first. If you qualify, you’ll be able to get a longer repayment term, which will keep your monthly payments lower than a short-term loan.

An equipment term loan will likely be your best option for faster approval and funding to finance equipment like new chairs, shampoo stations, a reception desk, and washer and dryer. Working capital loans and lines of credit can be good choices for seasonal dips in revenue, covering payroll, and buying personal care products for resale in your salon.

What Credit Score Is Needed to Get a Salon Loan?

The SBA does not set a credit score requirement. This is why applicants who get turned down by banks for an SBA loan can sometimes find success for the same loan with an online lender. Some of the online lenders on our list will accept credit scores as low as 600. As always, higher credit scores with better credit histories, and a lower debt to income ratio, will qualify you for lower rates and longer payback terms.

How Much Does It Cost to Finance a Beauty Salon?

Whether you are buying an existing salon or starting one yourself, you’re looking at $100,000 in expenses, if not more. Some of those costs include rent, equipment, inventory for your supplies, licensing, marketing, legal and accounting fees, utilities, cleaning, and payroll. 

Unless you have that much in your savings account, you’ll most likely need to finance most of these expenses. This will help you to manage your cash flow, cover your expenses, and also pay yourself so that you can survive.

But financing does cost you additional money, and you’ll be paying back more than you actually borrowed. You’ll find the best rates from banks, credit unions, and SBA loan programs, which start between 4% and 6%. Online lenders will range from 6% to over 10%, but they will require less paperwork and fund weeks faster.

How We Chose the Best Loans for Beauty Salons

We researched 12 lenders with experience financing beauty salons before deciding on the six best. We chose lenders who had many funding solutions because the use and amount of financing you’ll need will depend on where your salon is in its lifecycle. 

Lenders scored best if they had a streamlined application process with minimal paperwork burden on their borrowers. Since salon owners sometimes need money quickly to meet unexpected circumstances and opportunities, we chose lenders known for putting money in your account within days, not months.

Finally, the best lenders offered wide ranges of financing amounts, competitive rates, low fees, lenient credit qualifications, and required less than two years (in some cases less than one year) in business.

Article Sources
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  1. Upwise. "Upwise Business Loans."

  2. YourSBA. "Frequently Asked Questions."