Beauty Salon Feasibility Study in Arizona

Arizona salons borrow more per loan

The figure that separates Arizona from the rest of the salon market is loan size. The median SBA loan to an Arizona beauty salon from FY2017 to FY2026 was $150,000. Against salons nationally that is 1.50x, and the median also departs from Arizona's all-class median. Volume is ordinary: 167 approvals worth $39.7 million, with Arizona placed 20 of 54 among states and salons 10 of 39 within Arizona, with a location quotient of 0.92x that leaves salons a little lighter in Arizona's SBA mix than in the country's.

What the larger ticket buys

Arizona's salon loans span $50,000 to $365,350 across their middle half, a wide band. SBA 7(a) carries 162 of the loans and SBA 504 just 5, so very few of these loans fund a building. Franchise brands account for 16.2% of loans. Holders include large banks and other SBA lenders: Wells Fargo Bank National Association has 16 loans for $2.5 million, U.S. Bank, National Association 13 for $860,000, Readycap Lending, LLC 11 for $715,000, Newtek Bank, National Association 9 for $3.1 million and JPMorgan Chase Bank, National Association 8 for $1.6 million. Maricopa County has 130 of the approvals and Pima 24. Volume stepped up recently, with 32 loans in FY2024 and 29 in FY2025.

The loss record behind the loans

Arizona's salon losses are material. Among the 54 salons that drew their funds in FY2017 to FY2021, 9.3% or more have been written off to date and 5.6% inside the first five years. Cancellation after approval sits at 10.8% for the FY2017 to FY2024 approval years, and the ceiling matches it at 10.8%, since every Arizona salon loan from those years has either funded or been cancelled. These are minimums: loans still open can fail.

A bigger loan in a trade with real losses means the borrower carries more debt per chair, so a feasibility study for an Arizona salon has to show that the chairs will be filled. Demand testing should count competing salons and suites around the specific site and look at whether stylists will join as employees or prefer to rent. Cost should come from contractor bids for plumbing, ventilation and finish. Debt service coverage needs a ramp that reflects the time it takes a new location to build a client book, stressed for stylist turnover. For an acquisition, the appraisal is of a business rather than a building, and the study should support the price with the seller's verified revenue and the staff who will stay.

We apply no special coding caveat to beauty salons, but the usual limits hold: these are SBA approvals only, salons are identified by the borrower's own industry code, and each Arizona rate is a minimum.