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Whether you’ve been running your salon or spa for years or are just starting out, there might come a time when you need capital to invest in growth. Spa and salon owners take care of a wide range of health and beauty needs, helping people mold themselves into who they want to be. But growing the business often means adding new services, and that requires capital — for equipment, training, and even new hires.
If you don’t have the capital on hand to do that, where do you look? Spa business loans might be your best option.
Before you ever take out a loan, you need to be certain you can pay it back. Think critically about what you will be investing the capital in, and how much you can afford in terms of monthly, weekly, or daily payments.
Once you’ve looked at your numbers and feel confident that a loan is a good investment and something you can afford, it’s best to start your search at one of the following places:
1. Your Bank
The most affordable place you will find funding will be from the bank you currently work with or another local establishment. Bank loans will be THE cheapest source of capital. However, they aren’t the easiest to secure. The applications can be time-consuming, it might be weeks or months before you hear back, and approval rates are at all-time low.
But if you know your finances are in shape and you have the time to wait, getting a traditional term loan or line of credit from your bank is the best option.
2. The SBA
SBA loans are another great option if you’re in the market for a spa business loan. While the SBA doesn’t directly lend to small businesses, they do guarantee a portion of an SBA loan, which encourages lenders to take on more risk. Although SBA loan applications can also be extensive, the process tends to be a bit more streamlined than a traditional bank. You’ll still need your finances to be in relatively solid shape, but if your bank says no, try looking at an SBA loan as an option.
Keep in mind that the SBA process can also take some time. If you are in a rush, it is not the best place to start your search.
3. Online Lenders
In recent years, many online “alternative” lenders have come onto the scene to help make up for the lack of bank lending to businesses. These lenders offer all different types of products at very different prices, but if you need a spa business loan quickly or don’t qualify at the bank, going online for a loan can be a great option.
The most difficult part about shopping for a loan online can be understanding the price. Many of these online lenders will quote their pricing in different ways, from interest rate to APR to factor rate. Always ask a lender for the APR of a loan before committing. Comparing the APR on any loan offers you receive is the best way to ensure you’re getting the most affordable deal for your business.
If your lender can’t or won’t convert their offer to APR, be sure to do the math yourself with a business loan calculator.
4. Business Credit Cards
If you need a spa business loan quickly, you might forget that you already have a financing tool in your pocket. Or, if you don’t already have a business credit card, you could apply for one that has a 0% intro APR period. Of course, utilizing business credit cards to finance your business is something that has to be done responsibly. If you don’t trust yourself, don’t do it.
Using a credit card in place of a spa business loan is best if the expenses you’re considering are smaller. Just as with a traditional loan, you want to make sure you have a plan for how you’ll pay back the sum you put on the card. You don’t want to dig your business into debt it can’t get out of.
Investing is growth is a tough but exciting decision for any spa or salon owner. As you’re evaluating this yourself, just remember to try to give yourself as much time as possible to read up and evaluate your options. If you’re going to take this step, you want to make sure you wind up in the most affordable option possible.
Image: Dennis Wong/Flickr