Owning a business can be one of the best things in life and one of the most rewarding. Many young people have a dream of owning a hair salon. This can be a challenging task and involve a long process that many are unprepared for but can be one of the best business ventures to start.
Are there hair salon grants? Though there are not grants for salons, as a business owner, you can receive loans that will help you open your doors. To get these loans, you will need to have a well-put-together business plan with information on how you plan to repay the loan. If you already own a business and are a minority or a woman-owned business you may be eligible for grants.
Loans are different from grants, and as a salon business owner, you will not receive all of them. There are a few types of loans to look for when starting your business, and you will want to look at how much you can borrow and at what rate you must pay them back. Owning a business is not easy and owning a salon is a lucrative and competitive business.
What Is The Difference Between A Grant And a Loan?
When you start looking for ways to fund your business and get started, you will notice there are several different kinds of loans to take out. Some may get these loans confused with grants, but there are a few key differences you should be aware of.
This is money given to you by a bank or government agency that you do not have to pay back. Some schools may even give out grants or even your local government. Every form of a grant does not have to be paid back.
This is offered by private lenders or the government, and the key difference is that it must be repaid. Many loans will make you pay interest, which means you are paying more money than the loan is worth.
For most businesses, loans are easier to get but not always the most affordable. There may be some cases where a salon can get a grant, but it is tough to do.
How To Get A Loan?
You can take a few simple steps to acquire a business loan, but it may be harder said than done. You may also get denied for several reasons, so you must have solid proof that you can pay back the loans and have a backup payment plan. Here are the steps you need to take to apply for a loan.
Understand What Banks Look For
The banks will look at you as a person and run thorough background checks, and they will tell you before doing this. Not all loans will require this step but some will. They will also look at your credit score and line of credit to see if you can pay things back and are responsible.
Understand What Loans To Choose
A few different types of loans you can look for; some may be better suited for owning a salon. You can get a small business loan or SBA, which can come in $50,000 to 5 million dollars depending on your business and what you can afford.
There are also traditional bank loans, which is an excellent choice if you already do business with a bank and know who you are. This may be the easiest way to get a loan for you. Microloans are great if you don’t have a line of credit but have a fantastic credit score. There are many forms of financing, and you will want to be sure you look through them all.
Check out our article on where to get a salon loan HERE.
Know Who To Ask
Once you start looking for loans and understanding what they look for to get a loan, you will start seeing different companies to help you give you the loan. You will want to know and understand where to find each loan.
There are direct lenders, which are your banks, credit unions, and investors. You can look through lending marketplaces, allowing you to see who will give you money based on your information. You will want to ensure you go with someone well known and safe; anything online may be a risky way to go.
Prepare Documents For Lenders
You will need to ensure that you have personal credit score reports, any business credit scores, all tax returns personal and business, all licenses you have, and any contracts you may already have. All of these documents are incredibly important. If you don’t have one of these, it may lower the chance of being approved for a loan.
Why Would You Get Denied a Loan?
There are many reasons why your loan would get denied, and most of it has to do with being unprepared and not doing the proper research. If you gather all the information, you may need an excellent chance to get the loan. Here are some reasons you may get denied.
Personal Credit Score Too Low
If your credit score is below 700, you may not get approved for any loans. However, some you qualify for may have a much higher interest rate than the rest.
Credit Score Not Long Enough
If you have good credit but have not had any credit long enough, you may be denied a loan. Lenders like to see that you have had a good credit score for several years before approving a loan.
Filed For Bankruptcy
In the last few years, if you filed for bankruptcy, they may deny you the loan because it is a red flag. This may mean you cannot provide monthly payments to pay off the loan.
Some loans will require you to provide a background check. If you have a criminal past and it affected your business somehow, you will not get approved for a loan.
What Size Loan Should You Ask For?
Before asking for a random amount you think will cover a salon’s startup, you need to understand how much you need. You need to think about finding a space, and how much that will be, you need to consider if you can afford supplies on your own, and you need to think about the equipment you will need to operate the salon.
After you calculate how much you need, you will determine the size of the loan you want to ask for. This could be between $50,000 to $250,000, depending on what you need and what the loan will cover.
Who Could Get Approved For A Grant?
If you are still interested in a grant, there may be a few possibilities for you. Though there are no specific grants for salons, there may be other types you can acquire if you are not interested in a loan. These are harder to get because many people are competing for these grants. Despite what you see, most government grants do not go to people opening a business. Here is who can get a grant:
- Labs doing research
- State or local governments
- Schools like universities
- Law enforcement
- Non-profits in a specific field
- Specific businesses but not all
If you are looking for a grant, the best place to go is your local government webpage. If you see any ads say free grants or free money online, there is a higher possibility that it is a scam.
Other grants may be able to be received by minority groups, women, and a few home businesses. You will need to check with your local government to see qualifications and if you are eligible.
Owning a salon is a significant venture, and you can earn a decent living from this business. You will be able to grow and expand as far as you want to go. You will want to ensure you have all licenses and certificates required for this job, and that may also bump up the loan price. Though you may not find any grants where you are, there may come a time when something appears for salons, and you can access the funds through local governments.
If you are still looking to get grants, you will want to do the most research possible. Many grants are used for research and other non-profit organizations but will not be given out to open a business. You may have much better luck with getting a loan that you can repay over time. Loans are easier to get and will help you open your business quickly and efficiently. There are also many more options to get a loan versus a grant.
How much do salon owners make?
On average many salon owners make $75,000 a year. However, they can earn more through marketing strategies and by providing more services.
How much to charge for booth rentals?
Many owners rent booths in high-end salons to help boost their income. On average, a booth rental can fall anywhere from $250 to $1200 per booth a month.
How do you get preapproved for a business loan?
Once you gather all the necessary information, you can request to talk with a lender. They will view the information and inform you of what you can afford and what you may be eligible for. However, this may not be the amount you get in the end.
Looking to start your own Salon? Get the documents you need to get organized and funded here.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Shawn Chun is an entrepreneur who has owned several types of businesses from a coffee shop to an import and export business to an online review business plus a few more and now creates online resources for those interested in starting a salon business. It is demanding work he loves to do it. Shawn says “I do it for those passionate about their business and their goals. I know how hard the struggle is to obtain and retain clients, finding good employees all while trying to stay competitive.”
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