Business Loans
for Nail Salons

Start at the beginning – the reason you need to borrow. Has it been a slow week and rent is due? Or, maybe you want to open a new storefront and expand into a nearby strip mall? 

If you need short-term, quick funding a working capital loan could work best for your needs. To fund a larger, more long-term need, consider applying for a small business loan. To purchase new pedicure spa chairs, look into equipment financing or a secured borrowing. 

Each of these loans will have repayment terms that match why you’re borrowing. It makes no sense to be making payments on a loan after you’ve received its benefits. Get clear on why you’re borrowing before applying so that you pick the best loan for your business. 

Knowing the answer to why you need to borrow also dictates how much you need to borrow. Once you have a plan in place, budget how much money you need to realize that plan. When you apply for a loan, you want to request enough capital to cover all your needs. 

Price out the cost to secure and build out a new location, including purchasing pedicure chairs and sanitation equipment. If you’re applying for a working capital loan, consider requesting enough to cover a few month’s expenses while business picks up. It’s important to have a concrete figure in mind when you approach lenders and apply for funding. 

The risk of under borrowing is that you’ll fall into debt stacking – borrowing on top of existing debt to complete a project – or a debt cycle – borrowing again as soon as one loan is paid off. Both situations can harm your business’ financial situation and long-term success.

The nail salon industry saw inconsistent growth up to 2018, and was obviously hurt during 2020. While the industry is rebounding, lenders may still be wary of lending capital to newer businesses.

Traditional lenders often require that borrowers have been in business two to five years, but alternative lenders will lend if you’ve been in business as little as two months. They look at your cash flow and other factors when making a lending decision. While you may pay higher rates to borrow from an alternative lender, with a short business history they’re your best option.

A credit score is a numeric representation of your credit worthiness. Credit bureaus look at your past payment history, existing loan balances, and any delinquent or missed payments to calculate a number. Lenders use it as part of their risk assessment during a loan approval process.

Traditional lenders prefer to work with borrowers who have credit scores above 650. For some loan products, they require a minimum credit score above 720. It’s a good idea to find out your credit score before wasting your time applying with a lender who might reject you for having too low a score. 

If you do have poor credit, you can save time and approach lenders willing to extend you credit. Alternative lenders extend capital to borrowers with scores as low as 550. 

Even if you have great credit, and could take out a loan at a bank, the loan’s repayment terms might not work for you. A loan’s terms include its interest rate, how often you’ll make payments, the size of the payments, and how long you’ll repay the loan.

Traditional lenders typically offer amortizing loans – loans repaid by a fixed amount over a set period. If you took out a loan with a bank, you’d likely make a large, monthly payment on the same day of the month. But this repayment schedule doesn’t always match your cash flows.

If you have uncertain cash flows, or a cash flow pattern that would make a fixed repayment schedule difficult, consider alternative lenders. With a merchant cash advance you could make small, daily payments from your credit card receipts. Other loans have weekly or bi-weekly options. Before applying for a loan, analyze your budget and cash flows and pick a repayment plan that works for you.