Lifestyle experts in India have opined that shortly the beauty industry in the country is likely to grow twice as fast as in Europe and USA.
The optimism is backed by the survey conducted by the cosmetic industry, which reveals that it has grown almost 60% in the last five years. Commensurate with this phenomenal rise, the business of beauty parlors and salon has also seen a rise of 35%.
The beauty industry comprises of beauty products, beauty parlors, salon, spa, wellness centers, and the like. Women play a dominant role in the business as of now, and there are a host of lenders who provide loan to women tailor-made for their needs, and the business of beauty is one of them.
Beauty Business Models in India:
To comprehend the need for funds in parlors and salon, it is important to get an insight into the various models operating in India as the cover is a wide one. The type of services rendered by such centers transcends the typical haircut, pedicure, manicure models that is a common notion.
Let us have a snapshot of the range of services offered:
- Traditional Beauty Parlor or Salon
- Hair and Skin Clinic.
- Barber Shop.
- Spa center.
- Wellness Center.
- Cosmetology Center.
- Reflexology Center.
Modern trends in the Beauty Industry:
Without insight into the mechanics of emerging trends in the beauty business, it is difficult to close in on the types of business loan eminently suited to the industry. However, the growth driver in the business continues to be haircuts, styling along with dyeing.
There is also a perceptible change in the client profile as more and more men are getting interested in self-care and ownership.
Skilled employees and workforce training with the use of technology is the new trend. It is a challenge facing stylists and salon owners to deliver clients with seamless experience and satisfaction.
The key areas of services that call for skilled personnel are:
- Barbers, Hairdressers, and
- Pedicurists and Manicurists.
- Skincare Specialists.
- Massage Therapists.
- Color Stylists.
Ownership pattern in the Beauty Industry:
Funding in beauty business and eligibility criteria weighs heavily on the prevalent ownership pattern which accommodates small business as well as beauty chains. Accordingly, let us see what the scenario in India is:
- Stand-alone Beauty Parlor or Hair Salon: It is the most common type of establishment in India. This model is easy to operate and manage. But they are facing a challenge from large chains which have greater branding and marketing capabilities. Proprietorship, Partnership or Liability Company is the usual ownership.
- Franchisee of a Parlor Chain: Operating as a franchisee requires greater funding to establish though support for the setup, operations, training, branding, and advertisement is the responsibility of the franchisor. The usual ownership in this model is PLC or LLC.
- Franchisor of a Parlor Chain: Needs the largest amount of capital for setting up a chain. Ideal for this model of business is the PLC and LLC.
Business Loan Avenues for Salon and Beauty Parlour:
The need for the fund in this industry is different from other industries. Yet small business loans that can be of use are related to:
- Purchase and management in the beauty product industry.
- Purchase and upgrade of technology aids, including software and gadgets.
- Expansion and Renovation as the ambience of the establishment are prime in this business.
- Hiring and Payroll management of the skilled workforce.
- Streamlining cash flow and operational cost.
- Marketing, Publicity, and Visibility on various social media platforms.
The wide array of avenues can be funded using Term Loans, Line of Credit, Trader Credit, Advance Against Receivables, to name a few.
Eligibility Criteria for Salon Business Loan:
Notwithstanding foray of men in the business of late, women are still predominant in standalone parlors across the country offering a range of services to their clients.
Keeping this in view, the features are primarily sourced from Lendingkart, which offers specially tailored loans for women entrepreneurs.
The eligibility norms are:
- An operational establishment for a continuous period of six months.
- A minimum quarterly turnover of Rs.90k.
- Not located in the negative list area.
Requisite Documents for Salon Business Loan:
At Lendingkart documentation has been confined to bare essential to suit women entrepreneurs.
- PAN card and other KYC documents of the applicant and the business enterprise.
- All certificates of registration, incorporation, licenses and tax compliance proof.
- Partnership deed where applicable.
- Proprietor’s Aadhaar card.
- Financial statements and reports, including banks and ITR if applicable.
How to apply for Salon Business Loan:
For any small business loan, lenders provide an online facility for application. It is only the Fintechs who have fully transformed the process digitally. At Lendingkart, it can be accomplished in a few simple steps:
- Invoke ‘Apply now’ tab in the portal and complete the application.
- Upload all the requisite documents sought in digital format only.
- Get sanction of the loan after evaluation and vetting of documents.
- Disbursement and credit of the loan to account.
Fees, Charges, and other features of Salon Business Loan:
The cost of the borrowed fund is important to all borrowers. The ultimate aim is to liquidate the loan soon. The general principle applied in business loans is that longer tenure attracts lower interest rates. Poor credit rating may call for higher interest outgo due to the higher rate. Thus it is vital to check out the rates and fees imposed by the lender.
The rate varies between 15 and 27%
It is a one-time fee at 1 to 2% of the loan amount
Monthly or Fortnightly