Keys to Beauty and Hair Salon Financing in Canada
If you’re looking to get help financing a beauty salon, you’re far from alone. If you have put in the sweat and tears to get your small business up and running, and now you have reached a point where you can invest in some growth but don’t have the liquidity to expand immediately, then there are lenders out there that want to help you.
Of course, if you’ve just gone to a bank to get some credit, you may have found that beauty salon business loans are not always easy to get. Amansad Financial has relationships with lenders/funders that offer more flexibility than the big banks, but even with our lenders, there are some steps that you can take to make getting that loan easier.
How to get beauty salon business loans
1. Show a steady cash flow for your business.
If you want to get finance for beauty salon operation, you have to show that you can make money. Why? Lenders want to profit off their investment, and they won’t bet on a startup that has not opened yet. However, if you show a year’s worth of growth and at least several months of steady cash flow, then you have a lot greater chance of gaining approval.
You show this by bringing in your tax returns, bank statements and other financials for the business. The lender will understand how your business has grown and how you have successfully maintained and increased liquidity. If cash flow dropped for a particular reason (you had three beauticians quit suddenly, renovations to the building where you lease your shop cut traffic by 75% for a couple of weeks), be prepared to explain it. Lenders understand that business cycles ebb and flow for a variety of reasons. If you have an explanation for your own dips in cash flow, then most lenders will be able to work with you – particularly if you are trending upward over the last couple of months.
2. Make sure your existing debts are within reason.
If you max out all of your business credit as part of your daily operations, you will have a hard time finding a loan. Lenders who offer business loans for hair salons are more likely to help you if you ask for help before you start running up big debt loads on business credit cards. When you ask for the loan, be prepared to explain why you need the money. Expenses like beauty salon equipment finance make sense, and lenders will understand why you need it, but you should still have the numbers supporting your expansion. The more specific your plan is, the more likely you are to receive approval for your application.
3. Pay your existing obligations on time.
You can have the best business plan and the best expansion plan in the world, but if you have a poor record of paying your obligations, lenders will not want to deal with you. Why? Because they might talk about wanting to be helpful and to get your business off the ground, but the bottom line is that they are in the lending business to make money. If your business pays its obligations on time, whether it’s ongoing expenses or initial debts on which you are making payments now, then you’re much more likely to get what you want from a lender. Build a list of trading partners and vendors with whom you have built a relationship and to whom you have made payments on time. Having this list can help you gain traction with a lender who is asking the hard questions about other elements of your business.
4. Show that you have solid business judgment.
How can you prove this in a lending interview? Even if you have been open for a couple of years now, many lenders will want to see your business plan. This shouldn’t be the plan that you wrote when you started the business; it should also have updates to your short-, medium- and long-term goals for your beauty salon. Your goals should be specific, including growth targets for your business. If a lender can see that you’ve put in the time to plan this far ahead for your beauty salon, then he is a lot more likely to grant you a loan.
5. Take your request to several different lenders.
The loan business is just that – a business. Banks and other lenders need money, and if they reject all of their applicants, they won’t make any. But on your end, don’t necessarily take the first approval that you get. We always suggest that if time is in your favor to check your options with your bank or other like lenders. After all, they are looking at your business as a revenue source. That means that their decisions are not personal – they are calculated on the basis of anticipated profit or loss for their institution, and if you seem like a strategically sound use for their money, then approval is much more likely for your business. If you are unable to secure the financing you are looking for, get in touch with us for a Business Loan/MCA. Our focus is to provide bridge financing to help businesses from point A to B.
When applying with, you should have the following ready to provide with our completed application:
1. Copy of government issued ID for all principal owners
2. Business Articles of Incorporation
3. Business License
4. 3 to 6-month Merchant Statement History
5. A voided cheque with your company name
6. Copy of Business Property Lease (if you rent) OR Most Recent Mortgage Statement & Copy of Land Title/Deed (if you own the property)
Note: Business Financials and Profit Loss Statements are required for advances over $75,000.
At Amansad Financial, we have helped many small business owners get access to the financing they need to take their business to the next level. Let us help you and your beauty salon today!