If you are looking to start your beauty or nail salon business, one of the most important things you need is equipment. The beauty industry cannot function without equipment. Investing in equipment can be costly, but necessary even if your budget is small. Fortunately, this is where salon equipment financing comes in because it can help you get the equipment you need.
How Does Salon Equipment Financing Work?
Equipment financing is the process of buying or leasing equipment using an installment plan. It is a great way for businesses to get the equipment they need. Equipment financing helps your business bring in revenue and maintain cash flow while building working capital.
To apply for salon equipment financing, you need to look for a vendor and let them know a list of things you need for your business such as chairs, dryers, sinks and more. After you do this, you will get an application and provide the quote from a lender. The lender will review your application and determine if you qualify for beauty salon equipment financing. If you are approved, you will sign the agreement.
When your payments are finished, you have the following options:
- Keep the equipment you purchased
- Return the equipment you leased
- Purchase the equipment you leased
- Renew your lease
- Trade in the equipment you leased and upgrade to new items
Purchases You Can Make with Equipment Financing for Salons
With equipment financing, you can almost purchase anything for your business. It all depends on what the amount is that you are approved for and if the lender accepts the quote.
Some of the purchases you can make for beauty and nail salons are:
- Computers
- Point of sale devices
- Beauty station chairs
- Professional salon hooded dryers
- Nail tech
- Spa pedicure chairs
- Foot spas
Pros and Cons of Salon Equipment Financing
Having the newest equipment and technology is essential to help the business grow. By having the right equipment, you can attract new clients, improve your production, and earn more business revenue.
A benefit for startup beauty and nail salons is not needed collateral or a personal guarantee. It can also help you build your credit. The equipment that is being purchased or leased is used as collateral for the financing. If the business owner defaults on the payments, the financing company can seize and sell all of the equipment.
There are some companies out there that allow clients to get equipment without showing any financial documents. However, if you do have financial documents, you will be able to get a higher amount. Equipment financing has a fast and easy approve process and you can find out if you are approved within one day. Payments can be flexible and interest rates are fixed and as low as 5%. Another benefit is that you can use the payments as a tax deduction.
The disadvantage of purchasing with beauty salon equipment financing is the need to constantly update equipment. If the business owner has extended terms, it could mean that the equipment may be outdated by the time the loan matures.
How to Get Salon Equipment Financing
Some factors needed to get salon equipment financing are your financial history, equipment value, credit score, and ability to repay. If you do not have an established business credit yet or any tax statements, the lenders might rely on your personal credit history to see if you are creditworthy.
Options for Business Equipment
SBA Loans
Startup businesses can apply for microloans to fund the business. New salon owners can use the loan to finance equipment. The SBA loan program accepts applicants who normally would not get approved due to their low credit scores.
Unsecured Business Line of Credit
An unsecured line of credit can be used to pay for small salon equipment. Items like spa chairs and dryers should not be bought with an unsecured line. It could take too long to benefit from the investment.