The best term loan for a salon or barbershop depends on what the money is for and on your track record. If you have steady sales and need the money soon, Merchant Fund Express, our recommended funder, reviews your sales and deposits and often decides in 2 to 4 hours. If you have good credit, years in business and can wait, a bank, credit union or SBA loan usually costs less. For small amounts or brand-new shops, a community microloan is a good way in.
A term loan gives you a lump sum that you repay in installments over a set period. Below you'll find the ranked list, a comparison table, how to pick the right term for each project, and how funders read a business that runs on booth rent or commission.
Key takeaways
- A term loan gives you a lump sum repaid in installments; it fits projects with a clear cost, like a remodel or a second location.
- According to the SBA, a 7(a) for working capital or equipment usually runs up to 10 years, and up to 25 years for real estate.
- The SBA allows 7(a) loans for changes of ownership, so one can help you buy an existing salon.
- Since March 1, 2026, the 7(a) and 504 require 100% of owners to be U.S. citizens or U.S. nationals.
- If you collect booth rent, those payments need to land in the business account to count.
- Pick a term no longer than the useful life of what you're buying.
The best term loans for salons and barbershops, ranked
- Merchant Fund Express (recommended funder). Best for salons and barbershops with steady sales that need a lump sum soon: redoing the shampoo station, replacing chairs, stocking retail products or covering the opening of a second location. It reviews your sales and deposits, not just your credit; it works with credit from FICO 500, offers $5,000 to $5,000,000 and doesn't require collateral in most cases. It accepts applicants with an ITIN (no SSN needed) and offers Spanish-speaking support.
- Bank or credit union term loan. Best if your salon has been open several years, you have good credit, tax returns that show a profit and a relationship with your bank. It's usually among the cheapest options, but it takes weeks and almost always requires collateral or your personal guarantee.
- SBA 7(a) loan. Best for big projects. The SBA says the 7(a) can be used for working capital, equipment, furniture and fixtures, leasehold improvements and changes of ownership, up to $5 million. It's a solid route for buying a salon that's already running. Note: since March 1, 2026, every owner must be a U.S. citizen or U.S. national with a principal residence here.
- SBA microloan or CDFI. Best for two- or three-chair barbershops, brow and lash studios, or salons that just opened. The SBA says its microloans go up to $50,000, with a maximum term of seven years and an average of around $13,000. Community organizations make these loans and also provide advising.
- Online lender term loan. Best if your credit is fair and you want fixed installments without waiting on a bank. Check the payment frequency carefully: some collect weekly instead of monthly.
If you want to understand the product before comparing, read our guide to the term loan for salons.
Comparison table
| Option | Speed | Typical term | Collateral | What matters most |
|---|---|---|---|---|
| Our recommended funder (#1) | Decision often in 2 to 4 hours | Short or medium, depending on the offer | Not in most cases | Sales and deposits; from FICO 500; ITIN accepted |
| Bank or credit union | Weeks | Several years | Almost always | Credit, tax returns and financial statements |
| SBA 7(a) | Weeks or months | Up to 10 years (25 for real estate) | Up to the bank | Credit, cash flow and every owner's citizenship |
| SBA microloan / CDFI | Weeks | Up to seven years | Up to the organization | Each organization's criteria |
| Online lender | Days | Short or medium | Sometimes | Credit and sales |
How we rank: we don't use ratings or scores. We order options by speed, minimum time in business, minimum credit, whether ITIN or no-SSN applicants are accepted, documents, amounts and collateral. The full method is in how we rank business funding options. To learn how term loans work in general, see the basics of term loans for business owners.
The right term for each project
The rule that saves the most money: the loan term shouldn't outlast the project, and it shouldn't be so short that the payment strangles your cash flow.
| Project | Term that usually fits | Option that usually fits |
|---|---|---|
| Stocking products for December or wedding season | Short (months) | Sales-based capital or a line of credit |
| Replacing chairs, shampoo bowls or pedicure stations | Medium | Term loan, vendor plan or sales-based capital |
| Full remodel of the space | Medium or long | Bank, SBA, or sales-based capital if it's urgent |
| Opening a second location | Long | SBA 7(a) or bank; fast capital for the launch |
| Buying an existing salon or barbershop | Long | SBA 7(a) or bank |
| Covering a slow month | Not a job for a long term loan | A line of credit or short working capital |
If you're mainly buying chairs or specific equipment, compare with salon and barber equipment financing, where the equipment itself backs the payment. For the slow-month problem, a business line of credit for salons usually fits better.
Booth rent, commission or payroll: how funders read your shop
For a term loan, the funder wants to see that you can make a fixed payment every month or every week. Your business model changes how that looks:
- Booth rent. You collect a fixed rent from each stylist or barber. Your deposits are smaller but very steady, which banks like. Collect rent by transfer or app, not as cash in your pocket.
- Commission or payroll. The salon collects for every service and pays its team. Your gross sales are higher, but so are your expenses and payroll. The funder will see both sides.
- Hybrid model. Some chairs on rent, others on commission. Explain it in writing so a shift between months doesn't look like a sales drop.
- Tips and cash. If many clients pay cash, deposit all of it. What isn't in the bank doesn't exist to a funder.
For example, picture a hypothetical five-chair barbershop: three barbers pay weekly booth rent by transfer and two work on commission, with clients paying by card. Its bank statements show even deposits every week, which puts it in a good position for a term loan. If that rent were collected in cash and never deposited, the same shop would look half its size.
Common term loan mistakes in salons
- Borrowing more than the project costs. Every extra dollar carries interest. Build the budget from real quotes.
- Ignoring the payment frequency. A weekly payment feels very different from a monthly one when January is slow.
- Using a long loan for monthly expenses. Paying today's rent over five years is a bad idea; that's what lines of credit are for.
- Forgetting licenses and inspections. A remodel that touches plumbing or electrical may need permits; build them into the plan and timeline.
- Signing without reading the prepayment terms. If you plan to pay early, ask whether there's a charge for it.
- Ignoring your seasons. December, quinceañeras, graduations and weddings lift sales; January and February usually dip. The payment has to survive the slow month.
- Mixing personal and business accounts. If salon sales go into your personal account, a funder can't separate them from household spending. Open an account just for the business and run everything through it.
One last tip before you sign: list your sales for the last twelve months, month by month, and circle the three lowest. Then ask yourself whether, in those months, you could cover the new payment along with rent, payroll and products. If the answer is no, ask for a longer term, a smaller amount or a phased project. Remodeling in two phases beats running out of air in February.
How to apply, step by step
- Define the project and its cost with quotes: remodel, equipment, products, permits.
- Pick the term using the table above.
- Gather three to six months of business bank statements; for a bank or the SBA, add tax returns and financial statements.
- Have your salon or barbershop license handy, along with your lease and, if you collect booth rent, your agreements with your stylists.
- Get at least two written offers and compare total cost, term, payment frequency and penalties.
- Test the payment against your slowest month before you sign.
If you need a loan for your salon or barbershop and don't want to wait weeks, you can apply with Merchant Fund Express. Applying is free and won't affect your credit. Prefer Spanish? Leer en español.
Frequently asked questions
What's a term loan, and how is it different from a line of credit?
A term loan gives you a lump sum up front that you repay in installments over a set period. A line of credit gives you a limit you draw from only as needed, and you pay interest on what you use. For a project with a clear cost, like a remodel, a term loan fits; for expenses that rise and fall, a line works better.
Can I use an SBA loan to buy a barbershop that's already open?
Yes. The SBA says the 7(a) can be used for full or partial changes of ownership, as well as working capital, equipment and improvements. For equipment and working capital, terms usually reach up to 10 years. Remember that since March 2026, every owner must be a U.S. citizen or U.S. national to qualify.
Can I get a loan for a barbershop that just opened?
It's harder, but there are options. Community microlenders work with new businesses and provide advising. Sales-based funders usually want a few months of deposits. Banks normally ask for two years or more. In the meantime, deposit all your sales and booth rent so you build a track record funders can see.
Do I need collateral for a salon term loan?
It depends on the lender. Banks almost always ask for collateral or a personal guarantee, and the SBA leaves it to the bank case by case. Our recommended funder doesn't require collateral in most cases because it reviews your sales and deposits. Always ask what's required before you sign.
Can I apply with an ITIN instead of an SSN?
With some funders, yes. Merchant Fund Express accepts applicants with an ITIN (no SSN needed) and offers Spanish-speaking support. Some community organizations also work with ITIN holders. SBA 7(a) and 504 loans, on the other hand, have required U.S. citizenship or nationality for every owner since March 2026.
How fast can I get the money from a term loan?
With a sales-based funder, the decision can come the same day; an online lender usually takes days; a bank or SBA loan takes weeks or months. If your project has a deadline, like opening before December, start early and request the document list up front.