Business loans for hairdressers and beauticians

salon-loans-hairdressers-beauticians

The hair and beauty industry is said to be recession-proof: people always have money to spend on their looks. Whether you’re looking to start your own hairdressers or beauty salon, buy an existing business or upgrade your own salon, you’ll probably need some kind of finance.

This guide will break down your loan options and show you how to compare business loans.

How can a business loan help me?

If you’re in the hair and beauty industry, or planning to enter it, a business loan can help you with the following:

  • Pay for expensive equipment
  • Start a new business
  • Expand or upgrade your existing business
  • Hire more staff
  • Cover a temporary cash shortage

Salon loans you can compare today

Rates last updated November 19th, 2018
Name Product Min Loan Amount Max. Loan Amount Loan Term Application Fee Product Description
NAB QuickBiz Loan
$5,000
$100,000
1 to 3 years
$0
Apply for up to $100,000 and get a response within 60 seconds. No upfront or ongoing fees and a transparent fixed rate.
Lending Express Business Loans
$5,000
$500,000
0.25 to 2 years
$0
Apply online for up to $500,000 and get access to over 25 lenders through Lending Express.
Valiant Finance Business Loan Broker
$5,000
$1,000,000
0.25 to 5 years
$0
A Small Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 60 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
Note: If you apply and have your loan settled in November 2018, you will recieve $250 cash-back.
Moula Business Loan
$5,000
$250,000
0.5 to 2 years
$0
A loan of up to $250,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.
Spotcap Loans
$10,000
$400,000
0.25 to 2 years
$0
Benefit from a fixed interest rate and no upfront fees with a loan available up to $400,000. Must have been operating for at least 18 months and have turnover over $200,000.
GetCapital Flexible Business Loan
$5,000
$500,000
0.5 to 2 years
Initial draw down fee
A flexible business loan up to $500,000 with convenient top up and redraw facilities. Business must have been operating for 9 months+ and have monthly sales of $10,000+
businessloans.com.au Flexible Business Loan
$5,000
$500,000
0.5 to 2 years
Initial draw down fee
A business loan up to $100,000 for unsecured loans, or $500,000 for secured loans that you can use for any business purpose. Transparent costs and redraw facility available.
OnDeck Business Loans
$10,000
$250,000
0.5 to 2 years
2.5% origination fee
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
ANZ Unsecured Business Loan
$10,000
$1,000,000
15 years
$600
You can choose a fixed or variable interest rate
Apply for a loan from $10,000 with no security required and benefit from flexible repayment terms.

Compare up to 4 providers

What type of loan should I consider?

Business owners in the hair and beauty industry have many loan options to consider. The type of loan that suits you depends on the nature of your business and your finance needs.

Here are the most common business loans:

Loan Amount Pros Cons
Equipment loan Borrow the cost of purchasing equipment
  • Borrow money to purchase major equipment, such as tanning machines and salon chairs
  • Flexible payment options
  • Often fees and charges with this loan
  • Can be complicated to arrange
Line of credit $10,000- $100,000,000
  • Get cash to cover expenses when you need it
  • Only pay interest on what you spend
  • Lower risk than term loans
  • Need a good credit history
  • Can’t really use this loan for buying a whole business or for buying major equipment
Business Overdraft $10,000- $100,000,000
  • Unsecured loan linked to a business bank account
  • Can cover unforeseen expenses when you’re low on cash
  • Requires an existing business account
  • Only gain access to overdraft funds when other funds are depleted
Term loan $10,000- $500,000
  • Borrow a single, large sum which you pay back over time
  • Requires fixed, regular repayments
  • Can cover major expenses, such as fitouts, upgrades and equipment purchases
  • A large loan exposes you to more risks
  • Term loans usually require security
  • Lack of flexibility
Business credit card Depends on card
  • Spend money as you need it
  • Make monthly repayments
  • Requires you to keep track of spending
  • Requires good history
Unsecured cash loan $1,000- $100,000
  • Get quick cash without putting up security
  • Good for short, sudden cash shortages
  • An unsecured loan can put you and your business at risk if you cannot make repayments
  • Higher fees and interest rates

The type of loan you opt for can depend on the following factors:

  • Your assets. If you can put up a large sum of cash or a residential property as security, you have more loan options. Sometimes, you can use equipment from your business itself as security.
  • Your finance needs. An equipment loan is no use if you want to hire more staff. A term loan can help you upgrade your business and equipment but might be too slow if you need cash right now.
  • Your credit history. It’s harder to get certain types of finance, like credit cards or a line of credit, if you have poor credit history.

Case Study: Mara's Beauty Salon

Mara’s Beauty Salon

Mara has run her beauty salon for six years. She has recently completed an expensive refit of the whole salon. Business has really picked up after the refurbishment, but the salon’s funds are running very low. Mara isn’t worried about the long-term, but she has to pay wages for three employees. She also needs to pay for beauty supplies in the coming months.

Mara’s choice: Business overdraft

Mara contacts her bank and negotiates an overdraft for her business account. As an established customer in good standing, this is easy to arrange. Mara only has to pay an establishment fee and an annual fee. Now she’s able to access extra funds when her account runs low.

What costs do I need to consider?

There are many costs to think about when running a hairdressers or beauty salon. At the very least, you’ll need to think about the following:

  • Equipment. A professional hairdresser needs an array of expensive specialist tools, such as scissors, brushes, clippers, razors, dryers and salon chairs, not to mention mirrors, interior decor, a cash register and a computer. A beauty salon requires tanning and massage beds, spa baths and other specialised equipment for skin and facial treatments.
  • Premises. Buying or renting a commercial premises is a major cost for any hairdresser or beautician (unless you run your business from home or provide your services in customers’ homes).
  • Staff. Hiring staff allows you to serve more customers and make more money. Staff wages are a significant, but necessary, cost of doing business. You can get a clear idea of wage levels by looking at award rates for your industry and looking at job advertisements.
  • Utilities. You’ll need to pay your electricity bills, so don’t forget to factor that in.
  • Qualifications. Professionals working in the hair and beauty industry must follow the laws and regulations of their state. Hairdressers require a qualification. Beauty salons must comply with health and safety regulations.

How can I make sure I get a loan approved?

To ensure that your loan application has the highest chance of succeeding, you need to do the following:

  • Get qualifications and experience. If you’re a licensed beautician who’s worked in the industry for decades, you’ll have a much easier time getting a bank to lend you money. Make sure you have the necessary qualifications for your industry and gain experience if you haven’t got any.
  • Have a good business plan. Why should anyone lend you money? A detailed business plan sets out exactly how you will serve customers and bring in cash. If you’re starting a business from scratch, a good business plan is absolutely essential.
  • Put up security. What assets can you put up as security? If you own a property or have a large sum of cash, you’re more likely to get a loan (and on more favourable terms). If not, can you find someone who does to act as a guarantor?
  • Get your financials together. If you’re already running a beauty salon or hairdressers, you’ll need to show a lender your books. Prepare your tax returns, a statement of profit and loss and a balance sheet to demonstrate the financial health of your business.

Do you have any tips for buying an existing beauty salon or hairdressers?

Buying an existing business is a serious undertaking. You may be buying just the business and leasing the premises (leasehold) or buying a business and a commercial property (freehold). Either way, you need to do your research and seek expert advice where required.

Ask yourself these questions:

  • Am I buying a profitable business? Carefully examine the business’s accounts to determine both the revenue (the money coming in) and profit (what’s left over after all your costs are covered).
  • Am I paying a fair price? Even if the business you’re buying is a huge success, you could still be overpaying. Look at how much you expect to make from the business per year and work out how long it will take to pay back the purchase cost.
  • Is the business’s current success likely to continue? Look at market trends, changes in technology and the demographics of the surrounding area. A hair salon situated in a busy shopping mall is likely a valuable business. But if the nearby train station is shutting down or a bigger mall is opening down the road, then maybe not.
  • What am I really buying? Look beneath the surface of a thriving business and see what’s really going on. Is the business saddled with crippling debt or liabilities? Is the appearance of success revealed in the final figures?
  • Is there a growth opportunity I can exploit? If you think a struggling business could be doing much better than it is, then you might have found a very good deal. But be realistic.

How can I compare business loans to get the right one?

Whether you’re fresh out of beauty school or a small business veteran, the tips for comparing loans are the same.

Here’s what you need to look at:

  • Fees. The fees you have to pay vary by loan type and lender, but you should always factor them in. Some fees are one-offs while others are ongoing.
  • Repayments. Pay close attention to the repayment conditions of the loan. Some loans give you a few months before the repayments start. Some require fixed monthly repayments while others only require you to pay a monthly minimum.
  • Flexibility. Being able to extend a loan is a big advantage. Flexible repayment options can be a big help too.
  • Interest rates. Interest rates affect how much you actually end up paying over the lifetime of a loan. There are fixed and variable rates, and some loans have no interest at all.
  • Loan terms. The length of a loan matters. A one-year term loan might cover some of your monthly costs, but a line of credit can help if you need to cover expenses right now.

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