4 Surefire Tips for Securing Salon Business Loans | SMB Compass
Ezra Cabrera | December 7, 2019
Have you recently decided to open your own beauty salon? If you have, then you know the beauty industry has been experiencing significant growth over recent years, making your decision timely and wise, seeing it’s the kind of business that promises stability, positive prospects, and great returns. However, you do need to be aware of the fact that it can be challenging to secure financing for your startup business. This is why, if you are like most others, you should make arrangements to apply for salon business loans. The good news is, it’s easier than you probably think.
Related: 5 Alternative Loans for Traditional Bank Business Loans
In doing so, aside from mentioning your business’ potential for growth and success, you’ll need to have a few tricks up your sleeve. This will allow you to obtain the best terms as well as backing from a reputable lender. To help you achieve this, take a look at the following four surefire tips that can help you secure the adequate funding you need for your beauty salon.
1. Make sure to include an honest risk assessment
If you’re serious about your salon business loan application, you’ll need to be realistic and honest regarding the risks. The key is to come up with a solid business plan that clearly states the vision you have in mind for your future beauty salon. Once you do this, the risk for your small business venture will appear to be quite small. When you make a realistic risk assessment, your prospective lender will get the impression you know what you’re getting yourself into, as well as how to deal with any eventualities.
Even if you’ve presented an assessment that shows considerably high risks, your forthrightness can work in your favor. Low credit scores, bad credit history, low estimated profits, unorganized records, little or no collateral, and a poorly crafted business plan can increase your risk.
2. Don’t wait to start setting up your small business
Showing your business plan to your prospective lender is great. However, you’ll increase your chances of receiving the funding you need if you can establish an existing business using your own savings. Conversely, you’ll reduce your chances of getting a loan application approval for a salon business that’s yet to open. In other words, it’s easier to get your loan application approved if you operate an existing beauty salon that generates a profit.
You can get started by searching for a space to rent for your small business. Once you’ve found the right place, purchase a few basic pieces of salon furniture. Remember that at this point, your goal is to demonstrate your salon business can succeed at yielding returns with minimal investment. For the win, try to make the lender understand that with their financing, you can make it even better.
3. Show your potential lender how you can return their money
If you think that lenders take particular interest in the success of your beauty salon, think again. The truth is that they’re more concerned about your capacity to pay off the salon business loans with interest. That’s why planning your repayments beforehand is extremely important. Once a prospective lender clearly understands the steps that you’re going to take to return their money, they’ll most likely approve your loan application.
For instance, one of the more effective ways to appeal to lenders is to add your business savings account to your business plan that’s included in your loan application. The money that is meant to cover loan payments must be saved up using your business savings account. Furthermore, it’s also a great idea to give the lenders a clear picture of how you plan to use your loan money to cover your overhead.
Related: 7 Tips to Increase Your Chances for a Small Business Loan Approval
4. Cultivate a great personal relationship with your prospective lender
Another important factor that you’ll need to consider is the relationship that you have with your lenders. You’ll boost your chances of securing funding for your beauty salon if you make a point of cultivating close relationships with those who can finance your business.
For example, angel investors are wealthy individuals who are willing to provide startups with much-needed capital. They do this in exchange for ownership equity or for convertible debt. If you want to foster a good relationship with your angel investor, make them feel included in your salon business.
Should you decide to apply for salon business loans from traditional lending institutions such as banks, prove your dependability by opening a business account and getting credit cards from the same institution. You can establish trust if you make it a point to use some other services that these lenders offer.
Learn More About Salon Business Loans Today!
Salons need a steady inflow of cash to remain profitable. However, there will be times when sales are slow while expenses continue to pile up. If this is the case, one of the most viable solutions is to apply for salon business loans. These loans can give you additional working capital to pay for business expenses while you wait for sales to pick up. Since there are different types of loans to choose from, it’s best to consult a financial adviser, especially if it’s your first time applying for a loan.
About the Author
