What beauty projects fit a term loan?
Projects that change the space or the scale of the business. That includes plumbing shampoo stations, adding electrical for devices, building treatment rooms, installing nail ventilation ductwork, renovating finishes and opening or acquiring another location. These costs earn over years and have no single piece of equipment to secure them, so a longer term with set payments usually fits.
- Hair salon build-outs: backwash plumbing, electrical load for dryers and processors, HVAC and finishes. See hair salon build-out financing.
- Nail studio build-outs: pedicure plumbing, ventilation ductwork and durable surfaces. See nail studio build-outs.
- Med spa build-outs: treatment rooms, dedicated device circuits and a lobby. See med spa build-out financing.
- Second locations: build-out plus ramp-up, supported by the first location's deposits. See opening a second salon.
How are build-out funds released?
Many build-out loans release funds in draws tied to construction milestones or contractor invoices rather than one lump sum, which keeps money matched to completed work. Others fund at once and leave you to pay the contractor. Ask which applies, because draw timing affects when payments start and whether your contractor's schedule lines up with the funding.
A realistic draw plan for a salon might follow demolition and rough plumbing, then electrical and HVAC, then finishes and fixtures. Keep a contingency for surprises behind the walls. Chairs, backwash units and devices usually run on separate equipment financing, which keeps the term loan smaller.
| Project | Usual structure | Why |
|---|---|---|
| Plumbing, electrical, HVAC, finishes | Term loan, often in draws | Long-lived and not tied to one asset |
| Chairs, backwash units, pedicure chairs, devices | Equipment financing | The equipment secures it |
| Opening payroll, marketing, first inventory | Working capital or line of credit | Short-term and quickly repaid |
| Acquiring an existing salon or med spa | Term loan sized to the business's history | Its cash flow supports the purchase |
How do the lease and TI allowance affect the loan?
They shape both the size of the loan and how funding partners view risk. A landlord's tenant-improvement allowance reduces what you borrow, so negotiate it before signing. Funding partners generally prefer a lease that runs longer than the loan, because building out a space you might have to leave soon is harder to justify.
Before signing a letter of intent, ask the landlord what the space was used for before. A former salon may already have plumbing and electrical you can reuse. Apply before you sign, so the lease commitment matches the build-out you can comfortably fund.
What do funding partners review for a term loan?
Requirements vary by product and funder; many look at time in business, monthly revenue and credit. For build-outs they also review the contractor bid, the lease, your experience and the payments you already carry. For a second location, the first location's deposits carry most of the file, along with who will manage the new site day to day.
A clear package helps: an itemized contractor bid, a floor plan or scope of work, the lease or letter of intent, an equipment list and recent statements. For a med spa, funding partners may also ask how services will be staffed and supervised. BeautyFundr does not give licensing, medical or legal advice; rules vary by state.
When is a term loan the wrong choice?
When the need is short, recurring or tied to one piece of equipment. Seasonal gaps suit a line of credit, and a single device suits equipment financing. A term loan is also risky when the lease is short, the first location isn't yet stable, or the build-out assumes revenue your current client book doesn't support.
If the timeline allows and the project is large, compare SBA loan options alongside a conventional term loan. For recurring gaps, a business line of credit is usually the better fit.
What you’ll typically need
- Itemized contractor bid or scope of work
- Lease or letter of intent
- Equipment list or quotes
- Recent business bank and card processing statements
- Business tax returns
- Government-issued photo ID
Frequently asked questions
Can a first-time owner get a build-out term loan?
It's harder than for an established business, but not out of reach. Funding partners weigh owner experience, credit, the plan and any documented income more heavily when there's no business history. A stylist or esthetician with years in the industry and a following that shows in deposits presents better than an investor new to beauty. Requirements vary by product and funder.
Should equipment go on the same loan as the build-out?
Usually not. Equipment financing tends to fit chairs, backwash units and devices better because the equipment secures the agreement, which can mean better terms and a smaller term loan. Splitting them also lets each piece of funding run on a term that matches its useful life, instead of stretching everything to the longest term.
Can a term loan help me acquire an existing salon?
Yes, acquisition financing is typically a term loan sized to the business's historical cash flow. Funding partners review the seller's deposits and records, the lease transfer and your experience. Because clients often follow stylists, a plan to keep key staff through the transition matters as much as the numbers. Commercial real estate purchases aren't part of this.
How long does a build-out loan take?
Longer than working capital or equipment financing. Bids, leases, scopes of work and sometimes draw schedules have to be reviewed, and the contractor's timeline matters too. Start the funding conversation before you sign the lease or commit to a contractor, so there's room to adjust the scope if the numbers call for it.
What if my build-out runs over budget?
It happens often enough to plan for. Build a contingency into the original request, keep change orders in writing and ask your contractor about likely surprises in an older space. Returning for more funding mid-project is possible in some cases, but it's harder and slower than planning a cushion from the start.
Build the space your clients deserve
Share your bid, lease or expansion plan and review the options your file supports.
Updated September 14, 2026 · BeautyFundr Funding Team