A major problem beauty salons face when applying for business loans from banks and traditional lenders is their overly strict requirements, which typically include:
- 2 to 3 years of operating history
- High minimum credit score (often 720+)
- Consistent, verifiable revenue over multiple years
- Collateral such as property, equipment, or other business assets
- Low debt-to-income ratio
- Extensive cash reserves
That’s why only 13% of businesses who apply for bank loans actually get approved.
Additionally, banks require businesses to submit mountains of paperwork, including tax returns, profit and loss statements, balance sheets, business plans, proof of insurance, and more. Evaluating all these documents is time-consuming, which is why most bank loans take 60 to 90 days to close.
As a result, many beauty salon owners and stylists are seeking financing options that are faster and easier to qualify for. In this article, we compare 7 common types of business loans available for beauty salons, focusing on two considerations:
- How strict are the requirements to qualify for the loan?
- How quickly can they fund?
We also discuss how beauty salons can secure same-day financing from Redline Capital with only four months of bank statements.
Use our automated business loan pricer to pull instant quotes and see what your business qualifies for.
1. Revenue-Based Financing
Revenue-based financing tends to be the best loan option for most beauty salon businesses. Unlike traditional banks, approval is based entirely on your business’s revenue, and the main requirement you need to meet is the minimum revenue benchmark of the provider you’re applying with.
For example, at Redline, you only need $30,000 minimum monthly revenue. This makes it much easier to qualify for financing than with large banks. You don’t need to have perfect credit, cash reserves, collateral, low debt-to-income, or operating histories several years long.
Because the approval process is so straightforward, revenue-based financing lenders typically rely only on your bank statements to verify your business’s revenue. This lightweight paperwork enables them to review your application in a matter of hours and wire the funds into your bank account faster than traditional bank loans. With Redline Capital, we only need a four-month bank statement and can fund on the same day you apply.
In contrast, banks and other traditional lenders ask for a long list of documents, including financing records, profit and loss statements, tax returns, details of existing debt, and a business plan detailing how the loan will be used. Underwriting all these documents takes time, and beauty salon owners may have to wait weeks to get a reply.
Read more: Why Use Revenue-Based Financing Instead of Debt Financing?
How to Apply and What Paperwork to Prepare
To apply for revenue-based financing, you typically only need bank statements proving that your beauty salon meets the minimum revenue requirements. For example, Redline Capital only asks for 4 months of bank statements. We don’t ask for tax returns, profit and loss statements, balance sheets, or any other paperwork that banks require. Here’s what our application process looks like:
- Check eligibility requirements: Ensure your beauty salon meets our requirements, which typically include generating at least $30,000 in monthly revenue, having a minimum of 12 months in business, and being based in the United States.
- Fill in our online application: Complete a short online form asking for your monthly revenue, industry, requested loan amount, and personal credit score. Alternatively, you can use our business loan pricer to see the rates and amounts you qualify for.
- Submit bank statements: We ask for 4 months of bank statements to confirm your monthly revenue.
- Receive offers: We assess your monthly revenue and run a soft credit check (which does not affect your personal credit score). Within a few hours, we email you multiple offers with favorable terms. Each offer specifies the full funding amount, repayment amount, loan terms, and any additional information. If you don’t qualify for the loan you applied for, we send you offers for other possible financing options that can help your business meet its specific needs.
- Review your offers: You can review these financing offers at your own pace and decide which is best for your salon’s business needs. We don’t put any pressure on you to accept. You can take as much or as little time as you want, or you can decide to go with another lender.
- Receive funds: Once you select the offer that best suits you, you receive the funds in your business bank account immediately. This entire process, from application to funding, is typically completed on the same day.
Types of Business Loans for Beauty Salons
We offer multiple revenue-based financing options for beauty salon businesses.
- Working capital loans are short-term financing options for beauty salons to cover day-to-day operations like payroll, rent, inventory, and supplier payments, or to bridge temporary cash flow gaps.
- Term loans provide a lump sum of capital ideal for long-term investments like renovations, purchasing new equipment such as laser machines and styling chairs, or business expansion.
- Business lines of credit give beauty salons the chance to draw funds up to a set limit, repay them, and then reuse them as needed. Salons only pay interest on the amount actually borrowed and can be used for managing cash flow, purchasing inventory, covering unexpected repairs, or funding marketing campaigns.
- Equipment financing for beauty salons allows owners to acquire essential, high-value new equipment, including styling chairs, treatment beds, hair dryers, and laser machines. Instead of paying the suppliers directly for the equipment, we send you the funds. This allows you to buy from anyone, negotiate with sellers, or buy used equipment.
These options may be useful for different situations, but we evaluate every application the same way. We don’t ask for lots of documents; instead, we only need to know your monthly revenue with 4 months of bank statements.
What Sets Redline Apart From Other Online Lenders
We Help You Secure Lower Rates and More Favorable Terms
Applying with Redline Capital means you can qualify for lower rates and more favorable terms than you would have been able to get with other online lenders.
That’s because, over the last 15 years, we’ve established strong relationships with top business lenders, including OnDeck, Rapid Finance, Biz2Credit, Headway Capital, and others.
We’ve sent them hundreds of millions of dollars in loan applications to date, growing their lending business. In return, they give our applications wholesale rates, larger loan amounts, and discounts unavailable to direct applicants.
When you apply with us, you’re leveraging the hundreds of millions of dollars in business we’ve sent our lending partners over the years to secure the best loan terms possible for your beauty salon.
We Are an Ethical Lender and Never Pressure Borrowers to Accept
If you’re ever in a situation where you feel uncomfortable or forced to accept an offer that doesn’t suit your business, our advice is to look elsewhere.
Unethical, deceptive, or fraudulent lenders want to lure your beauty salon business into a financial agreement with astronomical interest rates and loan terms designed to trap you in a debt cycle.
At Redline Capital, we pride ourselves in our professionalism and never pressure businesses to accept our offers.
We send you a few offers, answer any questions you may have, and then let you decide what works for you. No pressure, no calls or emails. Take all the time you need. We actually encourage you to shop around and compare us to other online lenders.
Hear what some of our clients say about our offers, closing speed, and low-pressure approach.
Check out our case studies page to hear some of our borrowers’ experiences:
2. Traditional Bank Loans
A bank loan involves borrowing a lump sum of capital from a lender, which the beauty salon then repays with added interest over a fixed period through regular loan payments. It’s the most common type of financing and can be used to upgrade salon equipment, renovate premises, hire stylists and staff, or launch marketing campaigns. Some banks require assets to be used as collateral or personal guarantees from beauty salon owners to secure the loan, reducing risk for the lender.
Traditional bank loans often come with lower, more competitive interest rates (around 6% to 15%) compared to alternative online lenders. Promptly repaying a loan strengthens the salon’s business credit profile, making it easier to secure future funding with better loan terms.
However, to get a loan, beauty salon businesses must go through a lengthy and time-consuming application process that involves extensive documentation. This usually includes financial statements, profit and loss statements, balance sheets, tax returns, and a detailed business plan. Startup salons and newer businesses, in particular, may struggle to meet these strict requirements.
Traditional banks are also conservative in their lending. If your beauty salon business is generating $100,000 per month in revenue, banks may only approve you for $50,000 based on your personal credit score and documented financials.
In addition, traditional bank loans are not flexible. They are often fixed-sum, fixed-interest, and fixed-term. These loans do not adapt to the seasonal revenue that many beauty salons experience.
A bank loan is generally the best loan option for a beauty salon when the business is well-established, has strong credit, can offer collateral, and requires a large amount of capital for long-term investments. Bank loans are ideal for projects that will drive growth over several years.
3. SBA Loans
SBA loans are government-backed loan programs for small businesses. These loans can be used for a variety of purposes, including purchasing new equipment such as styling chairs and laser technology, renovations, leasing space, hiring stylists and staff, and buying inventory.
Beauty salon owners apply for funding through an SBA-approved bank or financial institution, not directly to the Small Business Administration (SBA). To reduce the risk for these lenders, the SBA guarantees part of the loan, encouraging lenders to offer loans to beauty salon businesses that might not qualify for traditional loans.
Key loan programs include the SBA 7(a) loan (general purpose), 504 loan (fixed assets like land and buildings), Express loan (fast processing for smaller amounts up to $500,000), and Microloans (up to $50,000 for working capital and inventory).
SBA loans provide beauty salons with highly competitive and low-interest financing. These loan programs typically have lower interest rates than conventional banks and long repayment terms (up to 25 years). In addition, established salon owners may benefit from 0% down payments, reducing the need for significant upfront capital.
However, SBA loans come with a time-intensive application process and strict eligibility criteria. The application process often takes months for approval, which is problematic for beauty salon owners needing immediate capital for equipment repairs or urgent renovations. Many salons, especially startup businesses, struggle to meet these requirements, and SBA loans have a high denial rate.
SBA loans are ideally suited for beauty salon businesses that need larger amounts of capital (typically $50,000 to $5 million), have time to navigate the application process, and meet the SBA’s eligibility requirements. They’re particularly valuable for commercial real estate purchases or major equipment investments where the longer loan terms justify the paperwork.
4. Business Credit Cards
A business credit card is a financial tool for beauty salons to manage everyday expenses and build business credit. It functions like a personal credit card but with higher limits and features like employee cards and tailored rewards, allowing purchases on credit with flexible repayment options.
Beauty salon owners can pay the full balance to avoid interest, or a custom amount that includes interest, typically ranging from 15% to 25%. Some cards offer introductory 0% APR periods that can provide short-term financing at no cost if the business can pay the balance before the promotional rate expires.
Using business credit cards for a beauty salon offers convenience, but it also presents significant financial and legal risks if not managed properly. In almost every case, a business credit card requires a personal guarantee. This means if the salon cannot pay the bills, the owner is personally liable for the debt.
Business credit cards are a good funding option for managing short-term cash flow needs, earning rewards on business purchases, and building credit history. They should not be used for large capital investments or long-term financing needs due to high interest rates and lower credit limits.
5. Business Lines of Credit
A business line of credit works as a revolving type of financing that provides beauty salons with access to a pre-approved pool of funds. These funds usually cover short-term needs, such as managing cash flow, covering unexpected costs, or purchasing inventory and new equipment. Unlike a typical bank loan, beauty salon businesses only pay interest on the amount withdrawn, not the full limit, and the funds can be reused once repaid. These loans are usually short-term, often ranging from 1 to 5 years, with some requiring annual renewal.
Eligibility for a business line of credit typically requires beauty salons to be actively trading for at least 6 to 12 months, possess a solid personal credit score, and generate consistent monthly revenue. Lenders often ask for multiple documents to prove financial stability, including business bank statements, tax returns, profit and loss sheets, and financial statements demonstrating the ability to manage loan payments.
Lines of credit come with some disadvantages. Unlike bank loans, lines of credit often feature variable interest rates that fluctuate with market conditions and short repayment terms. If rates rise, the cost of borrowing increases, making it difficult for beauty salon owners to budget for loan payments. In addition, compared to term loans, lines of credit usually offer lower maximum borrowing limits, making them unsuitable for large projects like major renovations or expanding to a second salon location.
For beauty salons, a line of credit should only be used as a temporary safety net, not for long-term financing or for covering recurring, long-term operating losses.
6. Equipment Financing
Equipment financing allows beauty salon owners to buy or lease new equipment, such as styling chairs, laser machines, hair dryers, or facial beds, without large upfront costs. It can help businesses manage cash flow by spreading expenses over time, often using the equipment itself as collateral.
In practical terms, these loan programs let salons upgrade to top-of-the-line, modern equipment, keeping the beauty salon business competitive and enabling them to offer the newest, most sought-after treatments.
Interest rates range between 8% to 30% depending on your personal credit score, time in business, and the equipment itself. As the equipment is often used as collateral, lenders are often willing to work with beauty salon businesses that may not qualify for other types of financing. Repayment loan terms usually match the equipment’s useful life, often 2 to 7 years.
The downside is that these funds can only be used to purchase new equipment. Beauty salon owners cannot use equipment financing to cover payroll, rent, or other operating expenses. Most financing agreements also require a down payment, often up to 30% of the equipment cost. In addition, fixed loan payments must be made regardless of the salon’s revenue, which can be difficult during slow seasons.
Salon technology changes rapidly. Financing may lock you into a long-term contract for equipment that becomes outdated before it is actually paid off. This is when leasing equipment for a few years may be an option, especially if the equipment will generate enough additional revenue to cover the loan payments. Many agreements also offer a lease-to-buy option, allowing the beauty salon to purchase the equipment at the end of the loan term for a one-off fee. Alternatively, the salon can continue leasing and upgrade to newer, more modern equipment.
7. Merchant Cash Advances (MCA)
A merchant cash advance (MCA) provides beauty salon businesses with a lump sum of capital in exchange for a percentage of their future sales.
These funding options are highly suitable for beauty salons that process high volumes of debit and credit card payments or bank deposits, offering flexible, fast funding based on future sales rather than personal credit score. Ideal for covering seasonal cash flow, purchasing new equipment, or funding renovations.
Instead of interest, MCAs use a fixed fee and a factor rate, making them easier to get for beauty salon owners with less-than-perfect credit but carrying high effective costs.
Repayments are calculated as a set percentage of daily or weekly sales. This means they follow the volume of sales: if sales are slow, your loan payment is lower; if sales are high, you pay more back.
MCAs don’t require collateral like property or equipment, making them accessible for beauty salon businesses without significant assets. They are generally quicker to obtain than bank loans, with less paperwork and more relaxed eligibility criteria.
The downside is that MCAs can be more costly than traditional bank loans. Factor rates typically range from 1.18 to 1.49, which means a $100,000 advance costs between $118,000 to $149,000. In addition, loan payments are usually deducted automatically from daily sales. For salons operating on tight margins, this constant reduction of revenue can make it challenging for beauty salon owners to cover payroll, inventory, or rent. Lastly, using an MCA does not help build business credit, unlike a traditional bank loan.