A Business Line of Credit

A business line of credit (LOC) could be a good choice for many beauty salons to meet their short-term capital needs. The flexibility of a LOC makes it possible to access the credit line when needed, make repayment, and access the credit line again over the term of the LOC. Unlike a term loan, interest is only paid on the funds drawn against the credit line.

Although different lenders have different criteria for how they evaluate whether or not they will offer a business a line of credit, OnDeck offers a business line of credit and looks beyond a business owner’s personal credit score and whether or not the business has specific assets that could be used as collateral, when evaluating creditworthiness. Of course, personal credit score, business credit profile, and other data are part of the equation, but metrics that demonstrate the overall health of the business are also considered when evaluating a business’ creditworthiness. The minimum qualifications for an OnDeck business line of credit include:

• A Personal Credit Score of 625+
• One Year in Business
• Annual Revenues of $100,000+

A business line of credit with OnDeck requires a personal guarantee to secure the credit line.

Terms for a Business Line of Credit

Depending upon the lender you choose, the terms may vary, but OnDeck offers the following terms:

• A line of credit up to $100,000
• Weekly periodic payments
• Funding in as fast as 1-3 days upon approval

Apply Now for an OnDeck Business Line of Credit

Short-Term Business Loans and Terms

A short-term business loan could be a good fit for a beauty salon that needs to purchase supplies or meet other short-term business needs. Lenders like OnDeck offer loan amounts up to $250,000, can often give you an answer on your loan application within 24 hours, and fund your loan within another day or two after that. Making it possible to quickly take advantage of opportunities to increase profits or otherwise fuel growth opportunities.

Short-term business lenders (like OnDeck), also look beyond a business owner’s personal credit score and whether or not the business has specific assets that could be used as collateral when evaluating a potential loan for a beauty salon. Of course, personal credit score, business credit profile, and other data are part of the equation, but metrics that demonstrate the overall health of the business are also considered when evaluating a business’ creditworthiness. The minimum qualifications for an OnDeck loan include:

• A Personal Credit Score of 625+
• One Year in Business
• Annual Revenues of $100,000+

A short-term loan with OnDeck does not require specific assets be identified as collateral, but a general lien on business assets and a personal guarantee will be required to secure the loan. This makes it possible for a healthy business without any specific asset to use as collateral, to qualify for a loan.

Loan Terms

Depending upon the lender you choose, the terms for a beauty salon loan offered may vary, but OnDeck offers the following loan terms:

• Loan Amounts from $5,000 to $250,000
• Repayment terms from 3 months to 12 months
• Daily or Weekly periodic payments
• Funding in as fast as 1-3 days upon approval

Apply Now for an OnDeck Short-Term Business Loan

SBA Guaranteed Loans and Terms

The SBA offers a number of loan guarantee programs that could be a potential fit for a beauty salon. The 7(a) loan program is a good place to start. You can read more about SBA loans HERE.

The 7(a) loan program is the most popular and probably the most flexible SBA loan. This loan is designed to fit a number of small business lending scenarios and could be a good fit if you meet the qualification criteria. It offers:

• Long-term working capital (3+ years)
• Short-term working capital (less than 3 years)
• Loans for purchasing equipment
• Loans for purchasing real estate, including property and buildings
• Loans for new construction or renovation
• Loans for establishing a new business or contributing to the purchase of an existing business

The interest rate you pay for an SBA loan is negotiated between you and the lender—subject to SBA minimums and caps[3]. Both fixed and variable rates are available and subject to an allowable spread based upon one of the following rates:

• The prime rate published in a daily newspaper
• The London InterBank one-month prime, plus 3%
• The SBA peg rate

Even though lenders are allowed to add a spread to the base rate, the maximum spread can be no more than 2.5% on loans with maturities shorter than seven years and no more than 2.75% on loans with maturities of seven years or longer.

SBA guaranteed loans typically have some of the lowest interest rates, but the qualification/application process can take weeks—or even months to complete.

OnDeck is not an SBA lender, but does offer small business loans to beauty salons as an alternative to an SBA loan and for those businesses where an SBA loan isn’t a good fit.

Much like other small businesses, beauty salons can leverage financing to help their business’ grow and thrive. Beauty salon loans, or financing available for beauty salons, make working capital available to salons to fuel expansion, growth, and meet other business needs.

[3] https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans#section-header-0