What business loans are available for hair salons and beauty salons in the UK
Running a hair or beauty salon takes skill, dedication, and the right financial backing. Whether you're looking to expand your current premises, upgrade equipment, or launch a new salon altogether, there's a range of business loans available to help you grow. We'll walk you through your options so you can make the right choice for your business.
Why salons need business finance
Hair and beauty salons have specific financial needs that differ from many other sectors. You might need capital for salon chairs, styling stations, professional equipment, stock, and staff wages before you see a return on investment. Understanding what finance is available helps you plan growth confidently.
- Start-up costs: Setting up a new salon can cost between £15,000 and £50,000 or more, depending on size and location
- Equipment and stock: Professional-grade furniture, mirrors, lighting, and beauty products require upfront investment
- Expansion: Opening additional treatment rooms or relocating to larger premises
- Cash flow management: Covering payroll and bills while building your client base
- Seasonal fluctuations: Managing quiet periods or investing in marketing campaigns
Term loans for salons
A term loan is a straightforward borrowing option where you receive a lump sum upfront and repay it over a fixed period, usually between one and ten years. For salons, this is often the most popular choice because repayment is predictable and the interest rate is fixed.
Term loans work best if you have a clear use for the money and can forecast stable income to cover repayments.
How term loans work
You borrow a set amount, repay it in regular monthly instalments, and interest is calculated on the outstanding balance. The loan term you choose affects your monthly payment - a longer term means smaller payments but more interest overall.
Who offers term loans
UK banks, building societies, and specialist lenders all offer term loans to salons. Many lenders now focus on small and medium-sized businesses and understand the salon sector well. Specialist brokers can help you find competitive rates without visiting multiple lenders.
Overdrafts and revolving credit
An overdraft or business line of credit gives you flexible access to funds when you need them. You only pay interest on what you actually use, making it ideal for managing cash flow gaps.
- Business overdraft: Your bank allows you to go into the red up to a pre-agreed limit, useful for covering short-term shortfalls
- Revolving credit facility: Similar to an overdraft but often with a longer term and lower interest rates
- Flexibility: Borrow and repay as needed without a fixed repayment schedule
- Interest charges: Only apply to the amount you draw down, not the full facility limit
- Access: Quick approval if you have an existing relationship with your bank
These options suit salons with variable income or unpredictable expenses rather than one-off capital projects.
Asset-backed lending and equipment finance
If you're buying specific equipment like salon chairs, mirrors, styling stations, or treatment beds, you might consider asset-backed lending or equipment finance. The equipment itself secures the loan, which can lower your interest rate and make approval easier.
Asset-backed options often come with lower interest rates because the lender has security, which reduces their risk.
Equipment finance
You spread the cost of equipment over several years. Monthly payments are predictable, and you can match the loan term roughly to the equipment's useful life. This is common for salon furniture and professional beauty equipment.
Sale and leaseback
If you already own valuable salon equipment or property, you can sell it to a finance company and lease it back. This releases cash for working capital while letting you continue using the assets.
Government-backed schemes and grants
The UK government offers several support schemes for small businesses, including some specifically helpful for salons and self-employed beauty professionals.
- Bounce Back Loans (closed to new applications): Although this scheme closed, some existing borrowers may still be managing repayments
- Start Up Loans: The Start Up Loans Company offers loans up to £25,000 for new businesses with business mentoring included
- Regional grants: Some councils and economic development agencies offer grants or low-interest loans for businesses in their area
- Skills and training grants: You might find funding for staff training in new beauty treatments or salon management
- Enterprise grants: Search gov.uk for current schemes - eligibility changes and new programmes launch regularly
Always check eligibility carefully and allow time for applications, as government schemes can take longer to process than commercial loans.
Peer-to-peer lending and alternative lenders
Beyond traditional banks, alternative lenders including peer-to-peer platforms and specialist finance companies serve the salon sector. These lenders often approve applications faster and may be more flexible about recent accounts or lower turnover.
- Peer-to-peer platforms: Connect businesses directly with individual investors willing to lend
- Faster decisions: Many alternative lenders provide approval within days rather than weeks
- Flexible criteria: Less focus on credit history, more on business potential and cash flow
- Higher costs: Interest rates may be higher than high street banks, so compare carefully
- Transparency: Look for lenders regulated by the FCA and check their terms thoroughly
Alternative lenders can be a good option if you've been rejected by banks, but always check interest rates and total cost.
What lenders look for
Whether you approach a high street bank or a specialist lender, most will assess your application using similar criteria. Understanding what they want to see helps you prepare a stronger application.
- Business plan: A clear explanation of what you'll use the money for and how it will help your salon grow
- Personal credit history: While not always essential, a reasonable personal credit score improves your chances
- Accounts and tax returns: Recent financial records showing your salon's turnover and profitability
- Proof of identity: Passport or driving licence and proof of address
- Director or owner information: Details of anyone with 25% or more ownership in the business
- Security or guarantees: Some lenders ask for a personal guarantee or security against property or equipment
- Business experience: Evidence that you or your team have experience running salons or similar businesses
New businesses or those with limited accounts can still access finance, though you may pay a slightly higher rate or need a personal guarantee.
How Spark Finance can help
Finding the right loan for your salon doesn't have to mean approaching dozens of lenders individually. Spark Finance is an FCA-authorised business finance broker (FRN 958123) that works with over 100 lenders across the UK. We understand the salon and beauty sector and can match you with lenders most likely to approve your application quickly.
- We're FCA-regulated, so you can trust our advice and service
- Access to over 100 lenders - far more choice than approaching one bank
- No-obligation eligibility check takes just a few minutes online
- No credit check at the eligibility stage - we won't impact your credit file
- Personalised recommendations based on your specific needs and circumstances
- Support with your application and guidance throughout the process
Start with a quick chat about your salon's growth plans - it costs nothing and could save you time and money finding the right finance.
Ready to find out what's available?
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Frequently asked questions
How much can I borrow for my salon?
This depends on your turnover, business plan, and the lender's criteria. Most salons can borrow between £5,000 and £250,000, though larger sums are possible for established, profitable businesses. Lenders typically want to see that your projected income can comfortably cover repayments.
How long does it take to get approved for a salon loan?
Traditional banks usually take 2-4 weeks, while some specialist lenders and peer-to-peer platforms can approve within 5-10 working days. The time also depends on how quickly you provide documents like accounts and proof of identity. A broker like Spark Finance can often speed up the process by matching you with the fastest lenders for your situation.
Do I need personal credit history for a salon business loan?
Most lenders check personal credit because directors and owners are personally responsible for business debts. However, a poor personal credit history won't automatically stop you - alternative lenders and some high street banks focus more on your salon's cash flow and business plan. Being transparent about any past issues helps.
What if my salon is brand new with no accounts yet?
New salons can still access finance, but you may face higher interest rates or be asked for a personal guarantee. Start-up loans through the Start Up Loans Company, or alternative lenders that focus on newer businesses, are good options. Having a detailed business plan and proof of relevant experience in the salon sector strengthens your application.
Important information: Spark Finance Limited is authorised and regulated by the Financial Conduct Authority (FRN 958123). We are a credit broker, not a lender. This guide is for informational purposes only and does not constitute financial advice. Think carefully before securing debts against property or assets. Your business may be at risk if you do not keep up repayments on a debt or other commitment entered into in relation to it.