Beauty Salon Feasibility Study in the Houston-Pasadena-The Woodlands, TX Metro Area

Salons that borrow twice the national median

Houston beauty salons ask for a good deal more than salons elsewhere. The median loan of $199,800 runs 2.00x the class median across the nation, and the 1.25x location quotient marks salons as somewhat over-represented in Houston lending compared with the country. From FY2017 to FY2026 SBA approved 222 loans for salons here, worth $63.5 million, which makes the area 8 of 546 for beauty salon loans although salons are only 10 of 39 among the area's classes. Loans in the interquartile band span $100,000 to $328,775.

Mix, franchising and geography

Nearly all of the lending is SBA 7(a), 216 loans against 6 under SBA 504. Franchised salons account for 39.6% of loans. Harris County provides 133 loans, Fort Bend 35, Montgomery 32 and Galveston 10. Volume dropped from 41 loans in FY2017 to 8 in FY2022 and recovered unevenly, with 23 in FY2023, 11 in FY2024, 26 in FY2025 and 18 in FY2026.

Charge-offs that a lender will notice

Take the 125 Houston salon loans from approval years FY2017 to FY2021 that were disbursed: the charge-off floor so far is 17.6%, and 7.2% failed inside five years. That first figure is only a minimum, because loans still open may yet fail. Loans cancelled after approval take at least 9.0% for FY2017 to FY2024 approvals; the ceiling counting undisbursed loans as cancelled is withheld by Loan Analytics, with no number and no implication of zero.

Who holds salon loans here

Simmons Bank holds 22 loans worth $6.3 million, Wells Fargo Bank National Association 18 for $4.3 million, The Huntington National Bank 17 for $4.2 million, Zions Bancorporation, National Association 15 for $3.4 million and Stearns Bank National Association 11 for $2.0 million. Every average ticket is small, and no 504 holder reaches the listing. These are SBA's holder records for the class and they do not say how any bank assesses salon applications.

Testing a Houston salon

A feasibility study for a salon at this loan size has to separate the owner's own book of clients from the walk-in trade and show how many chairs the site truly supports. Where the project is a franchise, the study should price the franchise fee, build-out standards and royalties against the unit's sales. Given the charge-off rate, debt service coverage must be shown in a weak year with rent increases and a stylist departure included. The appraisal can credit little collateral beyond equipment, so the case rests on earnings. Any loan whose county sits outside the July 2023 area list does not enter these Houston figures.