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Question – My wife and I started a hair salon which was doing great. We were growing and about to lease a storefront but I got sick and between the medical bills and time away from the business our credit really suffered. We are now back on our feet and the business is growing again but we need to expand again. Our credit scores are below 600. Is there any way to get a hair salon loan between $1000 and $3000 to move into a larger building? The only collateral we have is the salon equipment and furnishings which we paid around $5000.
Our Response – First of all, great job getting the business back on track and growing again. I have seen many instances where setbacks like this close the business. While your credit score may impact traditional bank financing here are a few options we recommend.
- First of all, talk with your current bank. Many have programs to repair credit and the amount you are requesting is within the range you are asking for.
- Microloan credit building programs such as Accion. These programs have some more flexibility for existing businesses that you may qualify for. The interest rates may be a little higher but with the amount you are looking to borrow, the interest amount will be minimal.
- If you accept credit cards, you could look to merchant advance loans. These have an amount from your daily credit card transactions to repay the loan. The interest can be a little high, but again the dollar amount of interest cost will be minimal since the amount being borrowed is small.
- Economic development revolving loan funds. Many areas have loans to start and expand businesses. Check our list of local revolving loan programs to see if there is one in your area.