Opening A Home Salon? What Are Your Equipment Financing Options?

Opening a home salon can come with a range of financial benefits, from avoiding potentially costly rent hikes to minimizing your transportation expenses to allowing you to take a home business deduction. However, when it comes to financing your home salon, you may be wondering about your options. Learn more about some of the ways you can finance the equipment you need to transform your home into a full-service beauty salon.  

Vendor-Direct Financing

Many salon equipment manufacturers operate their own financing options, essentially allowing salon operators to "rent to own" this equipment. Some of the advantages of this approach include the ability to return the equipment if it doesn't meet your needs and the availability of flexible financing arrangements (such as extended repayment terms, variable interest rates, and no prepayment penalties). However, you may find yourself paying higher interest rates than you could secure through other methods, and if you're not particularly wedded to a particular brand or manufacturer, it may be more helpful to investigate an alternative method.

Personal or Business Loan

The Small Business Administration (SBA), as well as state-run small business organizations, can provide you with a "backer" for a private loan through a bank of your choice. If the SBA approves your application, they'll essentially become a co-signer of your loan, guaranteeing that it will be paid even if you default. For many business owners, this can be a way to obtain financing at rates and terms that might not otherwise be available. Before you consider financing your salon's expenses on a credit card or taking out a second mortgage on your home, you'll want to investigate your SBA and state SBA options. 

Credit Card Advances or Promotions

Though credit cards carry some of the highest interest rates out there when it comes to financing purchases, those who have good credit and are confident in their ability to quickly recoup the cost of their salon equipment may be able to use 0 percent interest offers or balance transfers to their benefit. If you get a new credit card that offers 0 percent interest for 12 to 18 months, you'll be able to purchase your equipment, make only the minimum payments for the introductory period, and then pay off the balance before the rate increases

If you're unable to pay off the balance in full by the time your 0 percent promotion expires, you may be able to transfer this balance to another 0 percent card. Although you'll pay a balance transfer fee for this service (usually 3 percent of the balance transferred), this can still be a cheaper source of credit than other options.