For a salon, equipment financing fits chairs, dryers, pedicure stations and ventilation; working capital fits payroll and product orders during a slow stretch; and a term loan fits a remodel, a suite build-out or buying an existing salon. The cost decides which.
An article from Flintview Business Capital in San Luis Obispo, California on matching salon and barbershop costs to equipment financing, working capital or a term loan, with San Luis Obispo County, CA salon counts.
Salon Equipment Financing Explained With a San Luis Obispo County, CA Salon Buying Ventilation
The direct answer: match the money to how long the thing it buys will last. Ventilation units, pedicure chairs and dryers last for years and can secure their own financing. A slow month's payroll is gone in two weeks and suits a short loan or a line. A remodel or a purchase lasts for years but has nothing movable to pledge, so it usually rests on a term loan and the salon's income.
Ventilation is a good example of equipment that sits between categories. Source-capture units at nail tables are equipment; the ductwork and roof penetration are building work. Quote them separately so the units can be financed as equipment.
Illustration only, invented figures: $14,000 of ventilation units financed over 48 months at an annual rate of 11% costs about $362 a month (our arithmetic). See equipment financing.
A second test is how soon the cost earns its money back. New chairs that let the salon book one more client a day pay for themselves over months; a payroll gap is covered as soon as the next busy week arrives. When a cost earns back within months, a short term keeps the total interest low; when it earns back slowly, a longer term keeps the payment manageable. Writing down both numbers, the cost and the months to earn it back, is most of the decision.
Business Loan for Barber Shop: Styling Stations and a Suite Build-Out
A barber shop adding styling stations and building out a suite has the same split. Stations, chairs and mirrors are equipment; the suite walls, plumbing and electrical are a build-out.
Illustration only, invented figures: 6 stations at $2,400 each is $14,400, small enough for a short equipment agreement; a $52,000 suite build-out over 60 months at 10.25% is about $1,111 a month (our arithmetic).
County Business Patterns counted three barber shops with paid employees in San Luis Obispo County, CA for 2023, while Nonemployer Statistics, a separate program, counted 100 barber shops without paid employees for 2024. The two counts are not added together.
Working Capital for Salon Business: Pedicure Chairs and Retail Product
Working capital for a salon covers payroll, rent and product orders when bookings lag. Pedicure chairs bought during a slow stretch can be financed as equipment instead, which keeps the working capital for the costs that cannot be pledged. Retail product is inventory: it sits on the shelf until clients buy it.
Illustration only, invented figures: $20,000 of working capital repaid over 12 months at a yearly rate of 12% works out to roughly $1,777 per month (our arithmetic). See working capital loans.
Retail product is a cost owners can overlook. Shampoo, color lines and styling products bought in quantity tie up cash until clients buy them, and a large opening order for a new line can be financed as inventory and paid down as it sells. A partner reading that request will ask how long the salon took to sell through its last product order, so keep the POS report that shows it.
Three Invented Salon Costs, Three Funding Types, One San Luis Obispo, CA Owner
Illustration only, invented figures: one San Luis Obispo, CA salon owner faces three costs in the same year.
| Cost | Fits | Why |
|---|---|---|
| Ventilation units, $14,000 | Equipment financing | Long-lived units that can secure the payment |
| Payroll during a slow stretch, $20,000 | Working capital or a credit line | A short gap repaid from bookings |
| Buying a second salon, $145,000 | Term loan | A long-lived purchase with no single asset to pledge |
For the purchase, $35,000 down leaves $110,000 to finance; over 84 months at 10%, the payment is about $1,826 a month (our arithmetic). See business term loans.
Booking Reports and Bank Deposits a San Luis Obispo County, CA Salon Owner Can Print
A salon owner can print most of what a partner reads from the booking system and the bank:
- Booking or POS reports by month for the past year.
- Twelve months of business bank statements.
- The last two tax returns.
- The salon lease, or the signed letter of intent if the salon is moving.
- Quotes for chairs, stations or ventilation, and the contractor's bid for a remodel.
County Business Patterns counted 39 beauty salons and 34 nail salons with paid employees in San Luis Obispo County, CA for 2023, and Nonemployer Statistics counted 763 beauty salons without paid employees for 2024. More detail: salon business loans and the San Luis Obispo, CA page.
Partners also look at how stylists are paid. Commission, hourly pay and booth rent each change how much of a salon's bookings stay with the business, and a salon that is moving from one model to another should explain the change and its timing in the request.
By Flintview Business Capital · Updated
