Improving a salon business or setting up a new beauty salon may require salon equipment financing since most financiers and lenders have lowered the interest rate. There are several salon equipment loan options from financers explicitly looking to support salon businesses. Most of the salon equipment loans allow the borrower to use the equipment as collateral for the loan. Most do not need the salon owner to have a good credit score, especially when the loan amount is not extreme. The best news is that there are various options to select from, and it is easy to get one that favours your revenue, credit score, and timing of the venture.
A salon owner can choose three categories of options before engaging in a business loan and financing choices. They include.
- Wholesale Salon Equipment Financing
Most salon equipment wholesale stores offer salon owners loan options and may themselves sell the equipment to the client after suggesting a financial source. They supply the owner with equipment such as stations, stylist chairs, and other supplies. The rates applied on such loans usually vary from one retail vendor to another, depending on their terms. Some of them have interest rates for borrowers who manage to pay back the loan within the first 6-12 months. For later payments, the rates may range between 9.99-19.99%. The policies on the requirements to qualify for vendor loans differ from those of banks. Sometimes, they may need the business credit score, while others may not refer to the score before giving a loan. Businesses with good credit scores may, however, land on favourable rates. The loan amounts are variable, but some vendors limit the number of loans that can be spent on items.
- Lease and Lease-to-own.
The second option for salon owners to get loans for equipment involves leasing an item from a vendor instead of purchasing it and beginning to save up some cash to pay for the equipment later. Salon equipment leases have specific monthly rates, which are usually in 60 months terms. Not all the lease agreements request the business’s financial records up to a particular equipment cost. Borrowers who need equipment whose worth is more than $75000 may be asked to present financial statements for the past two months. Most salon owners go for lease options on items that are as expensive as $500000. The advantage of leasing items is that the salon owner acquires the latest technology equipment at very affordable prices. The lenders are also not strict on the rules of credit score and bankruptcy. The only setback is that the equipment’s value may be lower by the time the salon owner finishes paying off the lease-to-own loan.
- Equipment Loans
This type of loan is specifically for financing the purchase of salon equipment that the salon owner can use to begin running their business. The interest rates for such loans are about 2%-205. Most of the lenders require that the salon business has operated for a minimum of two years with revenue amounts that are more than $50000 and a good credit score of about 650+. The loan is worth about $5000 to $5million. The equipment bought using the loan is listed as collaterals, and the borrower does not need to have a deposit amount.
Below are some of the key points to ensure are handled for a salon business’s easy qualification to the financing options.
- Ensure that both the business and personal credit scores are higher than 600+ if the financers may need to see them.
- The business should have a valid business permit and license to show that the salon complies with the state laws.
- The owner’s credit history should be blameless. Issues such as bankruptcy and tax accumulation may lead to disqualification by some financial programs.
When a business has equipment of its own, it can utilize the equipment as they wish. The business may also resell the equipment in case of any financial crisis or changes. Leasing equipment, on the other hand, is advantageous since the salon owner can choose to return the equipment once they manage to repay the lease amounts or decide to purchase the equipment if they raise the total required amount and may be sold at much lower prices depending on the lease agreement terms. Salon equipment financing is an effective way for business owners to maximize their capital and upgrade their venture to keep clients looking to feel satisfied by the salon’s technology.