SALON & SPA INDUSTRY SCENARIO
Research says, the global spas and beauty salon industry is anticipated to grow at a CAGR of 6% and reach around USD 217.25 billion by 2026, from USD 144.48 billion in 2019 (globenewswire.com). When it comes to nail salons, the global market is forecasted to grow to a value of $22.6 billion in 2025 from $6.5 billion in 2020. In 2021, Asia Pacific accounted for a major share of the global nail care market, followed by North America. The new-age women, these days, look for innovative nail care products offering bold colors, special effects, soak-off gels, and nail finishes such as matte top coats, glitter polishes, and magnetic nail polish, which are available in many high-end salons, besides cosmetic retail shops. But, many prefer to purchase these products from reputed salons as there are experts who can demonstrate the right application techniques. Contact Zeropoint Finance for small business funding / merchant cash advances for your Nail Salon or Spa.
GET FUNDING FOR YOUR NAIL SALON OR SPA TODAY. APPLY NOW!
GET FUNDING FOR YOUR SALON OR SPA TODAY. APPLY NOW!
Current Trends Affecting the Salon & Spa Industry
Changing lifestyles of the urban mass
Today’s working women, especially those who belong to the media and fashion industries, tend to spend hefty amounts on grooming to look more presentable as physical appearance is often considered an important attribute of the personality. Besides hair and makeup, women, these days, desire to experiment with nail art, which has gained considerable popularity in the last few years. Also, social media sites, especially Instagram and Facebook, expose women to fashion enthusiasts and stylists, based out of different corners of the world. Hence, women, today, are quite aware of the global trends and regularly come across many innovative nail art designs on social media, posted by various individual nail artists or nail salons. Increasing disposable income of the urban working women also contributes immensely to the growth of the nail salon and spa industry.
Rising demand for better treatment and wages for nail salon employees
Multiple surveys, conducted in the USA, states that the employees of nail salons and spas are underpaid, exploited and abused in New York, which is today considered the nail salon capital of the country. The business owners claim money constraints and the difficulty to thrive in the industry to be the primary reason behind the low wages. These revelations have made consumers more careful about which salons they are purchasing services from. As a result, the market for high-end reputed nail salons has become competitive, more than ever.
However, many nail salon business owners are now understanding the need to pay their employees higher wages to ensure ethical business practices and prove their candor.
Increasing inclination towards nail hygiene
The nail salon industry is expected to witness a steep growth in the coming years due to the increasing popularity of gel manicures, acrylic nail extensions etc. Besides, nail spas are known to remove dead skin cells, improve blood circulation and prevent various communicable infections. Hence, for those looking to ensure nail hygiene along with style, nail spas have turned out to be a must-visit.
Why Need Nail Salon Financing?
Funding For payroll
One of the primary concerns of every nail spa and salon owner is the payroll. Services like manicures, pedicures and 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 nail salon small business 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 various nail salon financing companies.
Funds 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 nail artists or professionals. This is when nail salon owners need to turn to the financers for the funds they require for replacing outdated machines with new ones or bearing the cost of training the staff.
MCA (Merchant Cash Advance) for Nail Salons and Spas
What is merchant cash advance for Nail Salon or Spa?
A nail salon cash advance is the sale of a specific percentage of the salon’s future revenues, in return for a lump sum amount. An MCA lender pays an up-front lump sum to a nail salon owner and buys a percentage of the salon’s future sales.
Typical Repayment Structure of MCA for Nail Salon or Spa?
The lender typically redeems the percentage of sales that it has bought through an automated approach, a daily ACH(Automated Clearing House) deduction directly from a bank account. The cost of a merchant cash advance is typically presented as a factor, which is a fixed percentage of the amount advanced. This is added to the amount that the restaurant needs to pay back to the MCA lender. MCA loans are ideal for businesses that accept credit or debit card purchases, as the repayment amount gets directly deducted from the daily credit/debit card sales of the borrower.
SIMPLE PROCESS TO APPLY FOR MERCHANT CASH ADVANCE FOR YOUR NAIL SALON & SPA BUSINESS
As we mentioned before, the application process is simple.
We will break it down for you step-by-step.
The borrower needs to provide the lenders with social security numbers as well as signatures to get the credit pull authorized.
IMCA lenders ask for sales volume by card type, return frequency, processing fees, chargeback history, monthly costs, batch frequency, average transaction size and processor imposed reserves. The borrower needs to submit all pages of each bank statement, besides the above-mentioned documents. Articles of Incorporation, K-1 of recent business tax return, business property lease, any photo ID, voided cheques, recent business tax return and financial statements are also needed to be submitted.
The underwriters then get in touch with the borrower’s vendors, business property landlord, if any, or the bank holding the mortgage on the business property, to understand if the business has the permission of continuing operating in the same location at least throughout the loan repayment time frame.
The lenders contact the borrowers over calls to review the business information, discuss the use of the advance and assess the borrowers’ willingness to follow through with the contract terms. Some MCA providers hire inspection firms to perform a site inspection by visiting the borrowers’ location to verify the address, examine inventory and take note of the number of credit card machines available on site.
Finally, the repayment method is decided on and approval is given. The funds get transferred to the borrower’s business account within 48 to 78 hours.
Primary benefits of opting for MCA for your SALON
MCA (Merchant Cash Advance) providers do not require the borrower to put up any tangible asset as collateral.
Many times, nail salon owners 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. Once the borrower is found eligible by the lender’s underwriting standards, MCA lenders disburse the funds within 24 to 72 hours or a maximum of a week.
Nail salon owners with low credit can also apply for MCAs, as MCA lenders are more interested in the borrower’s monthly, weekly and daily income, than the credit scores, as they will recover the lent amount by withdrawing a certain percentage from the daily/weekly credit/debit card sales, till the entire amount is repaid.
Business Line of Credit for Nail Salons and Spas
Technically, it is a revolving credit that allows the borrower to withdraw only the required amount from the total approved amount. In the case of a Business LOC, the borrower must pay interest only on the withdrawn amount, but, the borrower must maintain the balance by repaying the amount that has been withdrawn. This type of financing is often used over 5 to 20 years. These come with a higher limit and lower APRs.
Nail salons witness slow business during winters. A business LOC often turns out to be beneficial for nail salon owners, who can use the funds to meet different business needs during the low-sale season.
A business LOC generally comes with an interest rate of 4% to 7%.
As business LOCs offer revolving lines of credit, the borrower can save on interest by paying off the loan early.