A Guide On Selecting The Best Financing Option for Nail Salons And Spas!
The nail salon & spa industry is recently witnessing steady growth due to the constantly-increasing self-pampering and grooming requirements of today’s contemporary women. The industry primarily provides services like manicures, pedicures, gel polish, nail arts and extensions. Not just services, nail salons, these days, also sell a range of professional nail care products to offer the customers the best homecare solutions for their extended nails or those with heavy artwork done. In developed countries like the United States, nail salons are doing extremely well due to the increasing demand for creative and unique nail art from women, who believe nails augment their personalities and boost confidence in not only social gatherings, and glamourous events, but also in day-to-day lives.
The nail salon business, like any other, requires a steady cash flow to ensure uninterrupted daily operations and expansion. Be it an established
hair salon or one that is recently opened, money is needed by businesses of all sizes to successfully run. Often, the available personal capital is not enough to carry out certain business operations or cope with any kind of emergency like the breakdown of equipment etc. This is when businesses lookout for financing options. Though there are multiple loan options for
businesses, small or big, not all will work best for each trade. Therefore, before applying for a particular type of loan, one should do thorough research and understand which financing option will be most convenient for his/her trade.
Things To Consider Before Applying For Nail Salon Loans:
Look at all the financing options available.
Before confirming a particular loan option, a borrower should always get an idea about other available loan options and the rates, terms, borrowing terms, etc. they are offering. This is just to make sure that the best financing option is selected. Loan aggregators can simplify the search process and fetch the borrower the most convenient financing option for the business. With the help of these aggregators, a borrower can connect with multiple lenders, compare loan options and find the most suitable financing option, with just one application.
Get an idea about the cost of a loan.
Before deciding on a particular financing option, one should always understand the true cost of borrowing, by calculating the interest that needs to be paid on the loan amount. Costs like origination fees and closing costs need to be considered as well. Besides, one should also find out if there are any prepayment penalties, in case of early closures.
Check the credit score and report.
For certain financing options like bank loans, credit scores play a significant role in the decision-making process. Only those with higher credit scores get loan approvals from banks. Therefore, borrowers need to know their credit scores, to understand which all financing options can be opted for and which are out of their reach. Alternative financing institutions are often lenient with credit scores. Merchant Cash Advance(MCA) lenders primarily consider the trade history and profit loss statement of a business.
Reasons Nail Salons need financing:
One of the primary concerns of every nail spa and salon owner is the payroll. Services like manicure, pedicure and especially nail art are getting
expensive these days, due to the increasing popularity and demand. Therefore, nail salons require skilled professionals to make sure they are offering high-quality services in return for the amount they are charging the customers. To hire and train professionals, a considerable amount of capital is required, which can be arranged from loans.
To go environment-friendly.
The concept of sustainability and environment-friendliness is rapidly emerging in most businesses, these days. Going green and using natural products is the current trend, followed all over the world. Many salons, today, are offering premium nail polishes that are vegan, cruelty-free and contain natural oils. These products are quite expensive due to high manufacturing costs. Therefore, to be able to purchase inventories, monetary aid is often required, which is provided by financers.
To purchase new equipment and introduce new techniques.
Salon owners need to either maintain the existing equipment or upgrade it to offer the customers the best services. A nail salon owner should always stay updated with the latest techniques entering the industry, to thrive in the competitive business climate. For that extensive training needs to be given to the nail artists or professionals. This is when nail salon owners need to turn to the financers for the fund they require for replacing outdated machines with the new ones or bearing the cost of training the staff.
Financing options for nail salons & spas:
Traditional Bank Loans
This is quite a good financing option for those who have a good credit score and excellent cash flow. One can opt for either a short term or long
term loan. Banks loans are often considered to be one of the best options as these offer the lowest rates, best terms and least fees. The interest rate of bank loans mostly ranges between 5 to 10 % and terms can be between 1 to 25 years. However, it is not ideal for those who need quick money, on an urgent basis, because bank loan processing is a time-consuming affair and approvals come in not so quickly.
These are ideal for those who are not eligible for bank loans, due to credit scores or any other issue. Fundamentally, traditional lenders sanction SBA loans, with the Small Business Administration’s(SBA) assurance of covering the losses, in case the nail salon fails to completely repay their financing. These loans are offered with 6-8% interest and a tenure of 3-25 years.
For those nail salon owners who are tired of facing rejections from banks and other traditional lenders, mainly due to low credit scores, profitability and inadequate documents, alternative financing might be the best option. The interest rates vary between 8 to 25% and terms between 1 to 5 years.
Merchant Cash Advance(MCA)
Often, nail salon owners come across certain situations, in the course of their entrepreneurial journeys, when they require urgent cash to cope with unexpected expenses like replacement or repair of equipment, add services that their competitors have already started or just hire new professionals, updated with all the ongoing nail art trends. This is when MCAs can be a saviour. MCA lenders provide funding, often, in a matter of 24 hours. When a nail salon or spa owner is going for MCA, he/she is, technically, selling a portion of the company’s future credit card sale in return for immediate financing. The financing is provided on the term that the lender will remit a percentage of each day’s credit card transactions, till the lent amount is recovered.
Primary features of MCAs:
1.These offer a flexible repayment period with no term limit. 2. The borrower can repay by credit card percentage splits at the transaction or on a daily basis. 3. MCAs are ideal for nail salons that accept credit card payments.
ZEROPOINT Finance connects aspiring nail salon and spa owners with the top MCA lenders in the industry. With close business association and relationship with the best lenders, ZEROPOINT Finance helps the finance seeker tap into the capital with extremely favourable terms for their businesses.