Women who have the training and some experience in beauty treatments can take it to the next level by opening their own beauty salon. Financing and a solid business plan are the prerequisites. Consider the first. It is necessary that you have some funds of your own and then look for external sources of funding. There are several options.
Friends and Family
This is the easiest way provided you have friends and family ready to assist with funds. The good thing is that you do not have to provide a security. They trust you to pay back the amount they loan you. The bad thing is that in the event your business does not generate adequate revenues it could affect relationships if you cannot pay back in time. It is best to have a written agreement instead of a verbal one. It is even better to offer them a share of your earnings on a long term basis.
If you are lucky, or if you make the effort, you could find a cash rich person ready to provide finance for beauty salon project of yours. Terms would have to be decided on a mutual understanding basis.
Small Business Loans
It is a good idea to consider the small business administration loans for small business. SBA has micro-loan program and the 7(a) program to provide short term funding through approved lenders that you can use as a small business funding option for your salon. You need to put together a project along with supporting documents and then wait for some time until your beauty treatment financing loan is approved.
It is the same with banks. You need to go through a lot of processes and have plenty of documentation in support besides providing a guarantor if required. The plus side is that rate of interest is low, your salon will be mortgaged as security and the repayment tenure will be spread over 2 to 5 years thereby reducing the monthly repayment burden. In both cases, it must be understood that you can expect to receive only about 70% of the project cost as beauty salon loan.
Small businesses are increasingly making use of private lenders to fund their ventures. Private lenders may go the usual route of providing beauty salon loans for women at a lower rate of interest provided property is mortgaged and you can furnish security. They also offer unsecured loans of different types.
Merchant cash advances: MCA, as they are known, get your funds in as little as a week in order to finance the purchase of equipment or for any other purpose without any security or guarantee. The downside is that you may have to be in business for a year and have revenues of $10000 or more in card sales. Additionally, the APR can be as high as 50% and repayment may be tied to daily credit card sales. Put this on hold for later when your business is running and you may need urgent funds.
Small business finance (unsecured): For those who cannot or are not willing to furnish a guarantee and need funds in a hurry, this is a good option. Again, as in MCA, the loans are unsecured and come with a high rate of interest. If you are confident that this type of finance for beauty salon will help you generate sufficient revenues to take care of the interest and principal repayment, and then take a good look at it.
It can be confusing for women who wish to start a salon with beauty business loans. On the one hand, you may think of starting in a small establishment with minimum equipment or go all out and be fully equipped. However, trust in the process and you will be bringing in the business in no time.