Have you been dreaming of owning your own business? Is it time to say goodbye to your employer and say hello to being your own boss? There is no time like the present to start making your financial dreams come true! Whether you are starting a brand new shop, or are looking at buying an existing business and revamping it to make it your own, you will probably need to borrow money to get your salon off the ground and prepared to greet your new customers. As you begin looking closely at your finances, it might help to start thinking about exactly what you will need to make your launch as successful as possible. Here are some options to consider for financing your new business.
Benefits of Owning A Beauty Salon
Many hair stylists are finding themselves exhausted at the end of the day and still coming up short at the end of the month. Owning your own salon will help you to be able to still do what you love, keep your clients, work less hours but be able to make more money. Not only will you no longer need to pay for your chair space anymore, but instead you can rent out all the other chair spaces to make back the money that you are paying in your property, if not more. This will help you maximize your earning power.
Different Types of Loans
Real Estate Loans
Are you interested in owning your business property? Do you want to design and custom build your space? Then a good Real Estate Loan is what you want. Owning your business property might sound expensive, however, it will allow you to be in charge of your monthly expenses. Unexpected rent hikes will not be a constant source of stress. You will also own a “real” asset that builds equity and you can always sell in the event that you want to liquidate your business in the future.
Small Business Administration loans are backed by the Federal government, so the risk to the lender is minimized. These loans are available in amounts from $150,000 to $5,000,000. You can get prequalified online without a credit check! This means that the entire application process is very streamlined. There are several types of SBA loans:
- 7(a) Loans – are the most common. They can be used for short term as well as long term working capital. This includes the purchase or remodel of an existing business, the buying of a business property, the construction of a new business, the purchase of equipment or machinery, and in certain cases they can even be used to refinance existing debt.
- CDC/504 Loans – are loans that are made available through Certified Development Companies who partner with the Small Business Administration. These loans are long term loans with fixed interest rates and can be funded for up to 5,000,000 dollars. This type of loan can be used to construct, purchase or renovate land, buildings, machinery, streets, landscaping and parking lots. They cannot be used to buy or build speculation homes or rental properties.
- Microloans – are loans of up to 50,000 dollars that are provided through nonprofit community organizations that each have their own application requirements. These organizations are not only lenders, but they also offer business management and technical support and assistance to the companies they lend to. These loans can be used for purchasing equipment, machinery, supplies, furniture, etc. They can even be used for working capital.
Business Lines of Credit
This type of financing functions somewhat like a business credit card. It allows you the flexibility of only pulling money out as you need it. In this way, your interest payments will be lower because you are not paying interest on one large lump sum of money that you may not really need all at once. To qualify for this type of loan, be prepared to submit full documentation of your financial status and to have your entire credit history looked at closely. It can take up to 30 days to be approved for this type of financing. The terms of a line of credit may change yearly. In some cases, you can arrange to make “interest only” payments for a period of time. You may be able to qualify for a line of credit for up to 500,000 dollars.
If you need to purchase special massage chairs, hair drying chairs, hair washing sinks, nail dryers, etc, then you might want to consider applying for an equipment loan. Ordering specialized equipment can take weeks or even months now. If you are approved for an equipment loan, you could be funded in less than a week. You will need to show proof of previous time in business and of fairly high and consistent revenues. If your credit score is not stellar, but you meet the other criteria, you will probably be surprised to find that you are eligible for this type of loan.
Your Finance Partners Experts
Now that you have a general overview of some of the different types of loans you might want to apply for, consider reaching out to our professional staff at Your Finance Partners to get more information on which types of financing might be best for you. Each type of loan has its own benefits. Bring us your goals, your questions and your concerns and we will gladly go over the pros and cons of each of your options to make sure we find the type of loan that will serve your needs best.