Beauty Salon Feasibility Study in Indiana

Indiana salons: a heavier share, a national-size loan

Salons claim a bigger slice of the Indiana SBA book than their national share would suggest. The location quotient is 1.25x, Indiana places 13 of 54 in the national salon ranking, and within Indiana salons stand 5 of 39 among asset classes. The loans themselves look like salon loans anywhere: the median of 224 approvals from FY2017 to FY2026 was $100,000, exactly 1.00x the national salon median, and Indiana's cancellation and charge-off floors are no further from the Indiana book or from salons elsewhere than our test allows. The middle half ran from $40,000 to $229,250, and gross approvals came to $50.4 million, so most of this book is fit-out, equipment and the purchase of an existing chair base rather than real estate.

SBA 7(a) carried 197 approvals and SBA 504 carried 27, a meaningful 504 share for a class of this size. That 504 activity is spread among Premier Capital Corporation with 8 loans, Community Development Corporation of Fort Wayne with 6 and Regional Development Company with 6. Among 7(a) holders, The Huntington National Bank has 32 loans worth $2.7 million, Centier Bank 16, Old National Bank 10 worth $2.9 million, and First Merchants Bank 6. Franchise salons account for 11.6% of loans. FY2024 was the busiest year, with 33 approvals worth $10.0 million.

Salon credit in Indiana: what the floors show

At least 8.6% of Indiana salon approvals, counting FY2017 through FY2024, were later cancelled; add the loans not yet disbursed and the ceiling reaches 11.4%. That spread matters to a borrower whose lease or build-out timing depends on the loan funding. Of 96 Indiana salon loans disbursed in FY2017 through FY2021, 3.1% are now charged off, while the five-year charge-off share is 0.00%, so the losses on record arrived after the fifth year. These are floors, since many loans in the cohort are still open.

What an Indiana salon feasibility study must test

Demand is local and the record is concentrated. Marion County holds 37 approvals, Hamilton 33, St Joseph 24, Lake 16 and Allen 12, so a salon in those counties can be compared with real local lending while one elsewhere has less history behind it. A study should test the stylist and chair count the space can support, the booth rent or commission model, and the competition within the client's drive. Cost work has to price plumbing, stations and ventilation at current quotes. Coverage of the Indiana payment should be tested at the loan requested, since $229,250 at the upper quartile carries far more fixed payment than $40,000 at the lower one. If the Indiana deal buys real estate, the appraisal must value that property without leaning on the salon. The record covers SBA lending only, so a salon financed conventionally does not appear in these figures.