Financing Barbershop Equipment. No matter if you are thinking about remodeling, updating, expanding or opening a new location, you know that you need high-quality barbershop business equipment. So, how can you get the financing that you need to make your dream come true?
“Money often costs too much.” – Anonymous
Let’s Get Started:
The truth is that unlike what you may think, you have plenty of alternatives to get the financing that you need for your barbershop business equipment. And today, we are going to discuss each one of them in detail. This way, you will finally discover all the options that you have and opt for the one that is more convenient and better for you. One of the things that you need to know is that it is likely that you can get the right financing that you need for your barbershop business equipment. The truth is that the barber shops market is booming and more lenders are borrowing money. However, it is also important that you can establish a solid ground for your business.
One of the things that you need to keep in mind when you are looking for financing barbershop business equipment is that depending on the loan that you choose. You may have more or fewer requirements. Generally speaking, most credit unions and banks tend to have a lot of requirements. You will need to follow a specific set of rules that include a high FICO score and a minimum of years in business, for example. In addition, these can take a lot of time to be approved.
On the other hand, you have the small business funding which is generally easier to get when you’re looking for financing barbershop business equipment. In some cases, tax liens, bankruptcies, and even bad credit won’t be in your way as long as you keep paying the monthly fee. In addition, this type of loan can also be approved faster.
As you can see, these are just two generic options that you have when you are looking for financing your barbershop business equipment. So, now, let’s take a look at the things that you need to consider in detail before financing barbershop business equipment.
Don’t Take A Step Bigger Than Your Leg:
One of the reasons why so many businesses fail during the first years of existence is because business owners don’t know how to measure the risks they are taking accurately.
The truth is that just like you shouldn’t bet all your money on the same horse, you should always have some cash on the side in case an emergency comes up. Let’s say that you are planning on expanding the barbershop business and that you want to open a new space. This will bring you additional costs but also additional revenue. However, since you need to buy barbershop equipment, you decided to use your “Emergency fund” to do it, and as soon as the new barbershop starts paying you, you will put it all back again in its place. Now, imagine that you have an accident at your current (and only) barbershop location and there is a fire.
You don’t have insurance to cover the damage, and you lose everything. The money that you had saved for an emergency was applied in some barbershop equipment that you won’t be able to use because you don’t have the money to pay for the rent. So, before you make any financing decision, make sure that you have enough money on the side to cover an emergency. While this situation may seem a bit too severe, this can happen. And it is better to be safe than sorry.
Barrow From Family & Friends:
When you have a low credit score, and you haven’t had a business for a long time, it can be hard to get yourself a loan for financing your barbershop business equipment. The truth is that while borrowing money from family and friends may be usual for some, for others it’s the first time.
One of the things that we have to say about this is that it can be a source of many problems and misunderstandings if things aren’t clear for both parties. So, it is always better to put everything in writing just in case something goes wrong. When you are asking your family and friends money as a loan, you should write down when and how the funds will be paid. In case you are asking your family and friends for the money as an investment, you will need to explain in writing that the business may not be even able to make a profit or that it may not make enough to repay them for quite a while.
One of the things that are likely to occur when you decide to ask money to your family and friends is that they will think that they have all the right in the world to run the business for you or that, at least, you should hear what they have to say about the way you are running your business. To prevent the “Business control factor” from happening, it is better to make sure that you put everything in writing once again. You should make it clear to who is the one who makes the decisions as well as who has something to say about the way the business is running.
Conventional Loans:
Conventional loans are the loans that you may apply to in both banks and credit unions. As we already mentioned above, these type of credits may be challenging to be approved when you don’t meet their requirements. Nevertheless, since you are looking for financing barbershop business equipment, you should at least know about their qualifications and confirm if you can use these types of loans or not.
Conventional loans are usually structured as a business line of credit as a term loan. No matter the circumstance, the funding amounts tend to vary between $100,000 and $10,000,000 and you will need collateral. In what concerns the fees, these tend to be low.
Business Credit Cards:
When you already have your barbershop, and you are looking for financing the equipment that you need to operate, you can apply for a Business Credit Card. One of the things that you need to know about business credit cards is that they are a lot easier to apply as well as to quality than traditional bank loans. Also, your credit limit with this card will be higher than on your personal credit card. So, by keeping both, you will have more money to finance the equipment that you need. Notice that business credit cards can seriously damage your credit score. The truth is that you need to use them wisely to ensure that you are not maxing it out.
Small Business Administration Loans:
Small business loans are another alternative that you have when you are looking for financing barbershop business equipment. This type of loan is similar to the ones that are provided by banks and credit unions, but the Small Business Administration backstops them. This means that in case you fail to pay for the financing, the government will cover most of the lender’s losses. Small business administration loans usually fund amounts between $50,000 and $5,000,000, and just like traditional loans, collateral is required. In terms of the fees, these are a bit higher than the ones charged on conventional loans, but they’re not high either.
Merchant Cash Advances:
The truth is that Merchant Cash Advances are not the same type of loan you may be thinking of, After all, you will need to sell your future barbershop receivables to a funding company in exchange for the financing that you need for the barbershop business equipment. When you are desperate for cash because you need to pay bills in one or two days, merchant cash advances may be your only option. However, it is also important to say that this is probably the most expensive financing option that you have. Merchant cash advances can provide you with funds between $5,000 and $1,000,000, and they don’t require any collateral. In what concerns the fees, these tend to vary a lot, but you should keep in mind that this type of financing can be costly.
Barbershop Equipment Leasing:
While you may want to buy all your barbershop equipment, you need to consider the option of leasing it. One of the main advantages of Barbershop Equipment Leasing is that you will be easily able to obtain all the barbershop equipment that you need today and you won’t get stuck with it for many years. When the term of the leasing is over, you can opt for buying the equipment, or you can extend the terms. To access barbershop leasing equipment, you need between $5,000 and $5,000,000, and collateral is required. In terms of the fees, you don’t have anything to worry about since these are usually low.
Alternative Loans:
When you already tried conventional loans and small business administration lending, and you didn’t succeed, you need to consider other options such as alternative loans. In this case, you should look for different lending sources such as Fintech lenders, mid-prime lenders, asset-based lenders, and other non-bank commercial lenders. The truth is that even though the terms and rates of these loans aren’t as good or desirable as the ones of conventional loans, you can still get the financing that you need to buy your barbershop business equipment.
Alternative loans funding amounts usually vary between $5,000 and $10,000,000, and they don’t require collateral. Besides, their fees are typically low.
Crowdfunding:
In case you are opening your first barbershop, then you can take advantage of Crowdfunding. The truth is that this is one of the most popular ways of funding start-ups.
Simply put, you will need to find a reputable crowdfunding website and write all the details about the funding that you need. Then, you will need to invite individuals to invest in your business.
In case you never tried crowdfunding before, it is wise to read a bit about it before you post your project idea summary.
Self-Financing:
Most small business owners use at least some of their own money to finance their businesses And you can do the same as well. However, you need to weigh both the pros and cons and make sure that you are making the right decision. In case you are considering this option, it is always better to seek professional financial advice. After all, you don’t want to end up caught in debt.
SNAP Leasing Program:
Last but not least, you also have the Snap Financing Program option. As long as the financing that you need for your barbershop business equipment is under $3,000, you can take this opportunity. With this financing program, you won’t even need a credit score. However, you will need to pay off the entire amount within 100 days of getting your financing. One of the best things about this program is that you won’t have any fees associated. In addition, you need to submit your application and immediately discover how much you’ve been approved for.
Conclusion:
As you can see, you have plenty of options to finance your barbershop business equipment. However, not all of them will work for you. Nevertheless, no matter if you are expanding your barbershop or opening a new one, we are sure that you will find the best way to get the financing that you need.
Blog Rating 4.3/5 Facebook Twitter Instagram Youtube These are great options, although at the end of the day the very best form of building a business is to save money throughout the year to avoid paying interest later on. Just my opinion but it worked for me!
OGsurgeonBarber87
Barbershop Owner
