Equipment Loan, Credit Line or Term Loan: What Fits Each San Rafael, CA Salon Cost?

Hydraulic styling chairs, dryer chairs and color processors are bought once and used for years. Through equipment financing, each of them can get a fixed monthly payment over a term close to its working life. Plumbing, drains and any changes to the space itself are building work outside this site.

Illustration only, invented figures: a salon orders 6 styling chairs at $1,280, 2 color processors at $2,650 and 3 dryer chairs at $890, $15,650 in all. The salon would owe $519.06 each month for three years at an invented 11.9% annual rate; interest accounts for $3,036.16 of the $18,686.16 it sends over that time. Split across the 6 stations, that is $86.51 a station each month, a figure the owner can set against what each station brings in.

Color, developer, lightener and the retail shelf are bought in orders and used up within weeks. A loan with a five-year term is the wrong fit for stock that is gone in a month. A business line of credit lets the salon draw for an order and pay the draw down as services and retail sales bring the money back; what is paid back can be drawn again for the next order.

Illustration only, invented figures: a salon draws $7,200 for a color and retail order and pays $2,400 back at the end of each of the next three months. At an invented 16.5% annual rate on the balance outstanding, the three months of interest come to $198.00: one month each on $7,200, $4,800 and $2,400.

The same line is a poor home for the chairs in the first example. A draw left out for three years pays credit-line interest the whole time and keeps part of the limit used up when the next color order is due, which is the reason the two costs sit on two products.

Buying a salon that is already operating, with its chairs, its stock and its book of regular clients, is a single large price paid once, and a term loan spreads it over years. The loan covers the business side: equipment, stock and goodwill. The lease is between the buyer and the landlord, and buying the building would be a real estate loan, which is outside this site. A salon that has not opened yet is not a purchase case and is outside this site as well.

With $29,000 down, the buyer finances $116,000 at an invented 11.25%. Spread across 84 months, each installment is $2,001.48 and the buyer pays $168,124.32 by the last one. A 60-month term asks $2,536.61 a month, $535.13 more, and brings the total to $152,196.60; the 84-month term costs $15,927.72 more.

Before signing, a buyer can set the seller’s bank deposits beside the sales the seller reports, ask which stylists are staying and how many regular clients book with them, and confirm in writing that the landlord will assign the lease. In the invented price, goodwill ($97,500) is worth only as much as the clients who keep coming back after the sale.

What a funding partner reviews depends on the product and the partner. For a salon, the file a partner may ask for includes:

• Several months of business bank statements, where card deposits and booth rent show up
• Time in business and the most recent business tax return
• The quote for equipment, or the purchase agreement and the seller’s statements for a salon purchase
• Existing loan, lease and advance payments the salon already makes
• The owner’s details; a partner may check credit during its own review

For the trade as a whole in 2023, County Business Patterns counted 342 paid employees in the 81 beauty salons of Marin County, CA, with $20.3 million in combined annual payroll (NAICS 812112, county totals, not figures for one salon). The salons page has the county and ZIP counts for beauty and nail salons, and the blog lists the other articles.