Beauty Salon Feasibility Study in the Grand Rapids-Wyoming-Kentwood, MI Metro Area

Grand Rapids: the cancellation floor is the distinction

In Grand Rapids the figure that stands out for beauty salons is the cancellation floor: cancellations took at least 23.7% of the approvals made across the FY2017 to FY2024 cohort. The 44 loans total $8.2 million. Salons rank 5 of 39 among the metro's classes, the metro is 43 of 546 for salon loans, and the location quotient is 0.83x. The median of $81,600 is 0.82x the national median.

Lenders and franchises

Loan amounts in the middle half run from $37,500 to $285,625. The 7(a) program accounts for 36 loans and 504 for 8, and franchises make up 13.6% of loans. Among lenders, only The Huntington National Bank is named, as the holder of 17 7(a) loans worth $1.6 million. SBA's holder record is the source for that line. Kent County supplies 33 of the loans and Ottawa County 6.

Only three years print a count: 9 loans in FY2018 ($800,000), 8 in FY2019 ($1.7 million) and 7 in FY2022 ($1.8 million). Loan Analytics withholds the remaining years because they rest on too few loans, and it withholds the stricter cancellation count for the same reason. No charge-off rate appears either, since that cohort is under 30 loans. Because only a floor is printed for cancellation, the true rate may be higher, and open loans can still change. Nothing is inferred about the missing years. The 2023 county list places the loans in the metro.

The size distribution adds to the picture. The middle half of loans begins at $37,500 and ends at $285,625, set against a median of $81,600, so most of these approvals are small tickets. A study should state whether the project leases its space or buys real estate, because a purchase changes the appraisal, the term and the risk. Franchises make up 13.6% of loans, so a plan for an independent salon should name its stylists, say how their pay works and describe the client base it expects to build.

Reading a 23.7% cancellation floor

For a salon plan, a floor near a quarter of approvals is a reason to document how closing will happen: lease signed, permits obtained, equipment ordered and a start date for revenue. The study should lay out chairs or suites, the pay arrangement for stylists, the site's customer base, and the build-out cost against a median of $81,600. It should show cash flow covering debt service while a client list builds, with the owner's own labor treated honestly. Whoever lends will read an appraisal beside it. History here promises nothing.