Why Short Term Debt Is the Answer When You’re Ready to Expand Your Salon or Spa Business

Needing to expand is a good problem to have as a beauty salon or spa owner. It’s a mark of your business’s overall health when demand for your services makes an additional location or the hiring of new employees a necessity.

Before you can move forward with an expansion, however, you’ll need to decide how you’re going to pay for it. Taking on a long-term loan is one option. However, it means tying up your cash flow for an extended period of time. Using short-term debt to get the working capital you need is a smarter way to help your salon or spa grow.

Short-term financing: How it works

Short-term debt can take several different forms. However, many are not suited for expansion projects. A merchant cash advance allows you to borrow against your business’s future credit card receipts to cover things like payroll or inventory purchases. Equipment financing is another short-term alternative. This may be appropriate if you need to upgrade your chairs or invest in a new massage bed.

When looking to expand an existing location or opening a new one, a short-term loan may be the best choice. Unlike a traditional bank loan, short-term loans don’t stretch the payoff out over 10 or 20 years. Instead, these loans are designed to be repaid relatively quickly, usually within anywhere from three to 36 months. Depending on the source of the loan, you may be able to borrow anywhere from $5,000 to $500,000.

Advantages of using short-term debt to expand

There are several reasons why short-term debt is more attractive than a long-term loan for expansion projects. First, it’s generally not as difficult to qualify for short-term financing as far as the credit requirements are concerned. If your salon or spa is a few years old but you haven’t had much opportunity to build up a solid business credit history, that’s not a deal-breaker for approval.

Next, this kind of debt is more accessible when it comes to how quickly you can get funding. If you have a dire need to bring in a couple of new stylists to keep pace with your growing customer base, it’s possible to get a loan or another short-term debt in as little as two business days. That’s much more appealing than having to wait several weeks to hear from the bank regarding a loan decision.

Finally, short-term financing in most instances doesn’t require any sort of collateral. When you own a service-based business like a salon, you may not have many tangible assets beyond your equipment or inventory. This is more true if you lease rather than own the space where your business operates. Not having to put up any collateral alleviates some of the financial pressure that goes along with obtaining financing.

Choosing a short-term debt provider

Salon and spa owners have multiple avenues for finding short-term debt opportunities to make their expansion plans a reality but they’re not all the same. When you’re looking into funding sources, it’s important to pay close attention to the details.

With short-term debt, the expectation is to make payments on a daily basis versus monthly. While that may not be the case with every financing provider, you should be aware of what form your payments will take. This is especially true if your business revenue ebbs and flows seasonally. If you’re seeing a huge influx of clients during the wedding and prom seasons, for example, but business is more evenly paced the rest of the year, you need to be sure you can afford the payments regardless of how much revenue you’re generating.

Cost is the other primary consideration. Short-term debt, including short-term loans, often come with a factor rate in lieu of an annual percentage rate. The factor rate is essentially what determines the cost of borrowing. If you’re taking on a $100,000 loan with a factor rate of 1.15, for instance, you’d repay $115,000. Before you commit to short-term debt, check with the provider to determine whether they use an APR or factor rate and what the rate is so you know what the total repayment cost will be.


Strategic Funding provides needed operating funds to small businesses. Strategic Funding has helped business in hundreds of industries.  Industries served include: restaurants, personal services, construction, medical, manufacturing, agriculture, retail stores, automotive, and food stores.

Get Started Today

Let’s get you the financing you need to grow your business. Whether you’re looking to expand, purchase equipment, fulfill an order or stabilize your cash flow, we can get you the right type of financing for your needs. If you’re still not sure which type of financing is right for you, you can use our matching tool or give us a call at (800) 780-7133 to speak with one of our financing specialists.

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