Alternative Finance Solutions for Salons

By Terri Arnold

You just found a great deal on a used spray tan unit. It’s nearly new and the owner is selling it for $10,000. The exact same unit would cost you $30,000 brand-new. You know a deal when you see one; you can’t pass it up, right? Haven’t your customers been asking when you’re getting a spray booth? Then again, purchasing that unit would leave you cash poor; you would barely have enough left over to buy the solution and sunless-related products that could further boost sales. Do you simply put it out of your mind until you have enough cash to buy one later? Or, would you like to borrow enough money to afford the used spray tan unit, plenty of lotions and accessories for maximum effects, and enough money for advertising your new service? 

If you want a reason to figure this all out – consider the $48,000+ monthly earning potential of that spray tan unit (in a salon that averages four sunless customers per hour at $25 per session x 16 hr/day x 30 days). But how do you come up with that kind of cash? 

Today, alternative finance solutions are available. This type of financing gives salon owners more control and purchasing power and less restrictive pay-off structures.

I’m sure, like so many, you are painfully aware of how hard it is to secure a lease or loan for your business. With traditional financing, you can jump through many hoops just to hear, “Sorry, we are unable to provide financing/leasing to you at this time.” Because so many tanning salons having a steady, yet seasonal, flow of cash, an advanced sales receipt finance structure may be worth considering. Sales receipt advances are based on your salon’s anticipated gross sales.

The actual amount advanced to tanning salons, health clubs or day spas will depend on the total of the anticipated sales based on a 12-month history of gross sales receipts. If approved, the salon owner can use the money for a wide range of business needs, such as new or used equipment, lotions and inventory. Some owners will decide to put the cash back into the business for upcoming projects, expansion, advertising or  day-to-day operations.

Often, a new salon or even existing salons may not have credit terms with distributors and pay cash on delivery. This type of business loan will allow them to have cash available based on future sales. It also allows salons to expand their inventory, particularly if they are heading into peak season.

Even without a strong business credit profile, a salon can obtain the money it needs, since gross sales receipt advances can be easier to obtain than bank loans. Banks and leasing companies, being more conservative these days, look at a black and white picture – rather than the potential growth possibilities of your salon or spa. In addition, it's quick and easy to apply for this alternative funding source.

Terri Arnold is an industry veteran providing finance solutions in tanning and fitness since 1994. For more information, visit www.gbrfunding.com , call 866.813.1555 or e-mail tarnold@gbrfunding.com.